Fraud Digest | SOTU – Prosecuting Mortgage Document Fraud


In the State of the Union address on January 24, 2012, President Barack Obama announced the creation of a special unit within the Financial Fraud Enforcement Taskforce to deal with mortgage origination and securitization abuses:

And tonight, I am asking my Attorney General to create a special unit of federal prosecutors and leading state attorneys general to expand our investigations into the abusive lending and packaging of risky mortgages that led to the housing crisis. This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans.

The members of the new Mortgage Securitization Abuses Unit were identified as New York Attorney General Eric Schneiderman; Assistant U.S. Attorney General Lanny Breuer, who currently heads the Criminal Division at the Department of Justice; Robert Khuzami, Director of Enforcement at the SEC; John Walsh, U.S. Attorney, District of Colorado; and Tony West, Assistant Attorney General, Civil Division, Department of Justice.

Later in the evening, New York Attorney General Eric Schneiderman released the following statement:

I would like to thank President Obama for his leadership in the creation of a coordinated investigation that marshals state and federal resources to bring justice for the victims of the misconduct that caused the mortgage crisis.

In coordination with our federal partners, our office will continue its steadfast commitment to holding those responsible for the economic crisis accountable, providing meaningful relief for homeowners commensurate with the scale of the misconduct, and getting our economy moving again.

The American people deserve a robust and comprehensive investigation into the global financial meltdown to ensure nothing like it ever happens again, and today’s announcement is a major step in the right direction.

New York Attorney General Schneiderman and Delaware Attorney General Beau Biden have been among the most outspoken of those in law enforcement regarding the prosecution of crimes relating to mortgage securitization. In May, 2011, Attorney General Schneiderman’s office announced probes of two Florida firms, Lender Processing Services and Nationwide Title Clearing. This office also announced probes into the mortgage securitization practices of major investment banks Goldman Sachs, Morgan Stanley, Deutsche Bank and UBS.

Attorneys General Schneiderman and Biden have repeatedly announced their opposition to any grant of immunity from criminal prosecution to those involved in illegal acts involving mortgage securitization.

Fabrication of mortgage documents is one of the major unaddressed crimes involving mortgage securitization. False documents were created to convince homeowners that mortgagebacked trusts owned their homes and had the legal right to foreclose. Based on these documents, hundreds of thousands of homeowners forfeited their homes. Every day, tens of thousands of homeowners lose their battle to get local foreclosure judges to recognize that the documents presented by the banks and mortgage companies are fraudulent.

Those few County Recorders who have conducted in-depth examinations of the documents have found widespread abuses that occurred over at least seven years. County Recorders John O’Brien of Massachusetts and Jeff Thigpen of North Carolina have declared their offices as “crime scenes.”

These documents were created in large part because the mortgage securitizers never obtained the mortgage documents they promised to obtain. Investors and the SEC believed that the securitizers had obtained properly endorsed mortgage notes and mortgage assignments and had recorded every change of ownership on the MERS system as promised.

“Providing meaningful relief for homeowners commensurate with the scale of the misconduct” is a tremendous, but achievable goal. Congratulations to Attorney General Schneiderman for setting this goal.



Prosecuting Mortgage Document Fraud

4 Responses to “Fraud Digest | SOTU – Prosecuting Mortgage Document Fraud”
  1. To Tell The Truth says:

    Buying more time to try to fix their wrongs which wont happen…until they make all the wrongs right properly…waiting out the homeowner so they become more discouraged….in Florida , in Miami Dade the property appraisal office has on file names of properties for such as Fanni Mae that Fannie may claims not to own stating the property not on their file but nevertheless, the property remains as owner Fannie Mae on our tax role…mmmm

  2. Pamela Edwards says:

    A little less talk and a lot more action is what is required here.Don’t see that happening anytime soon.Don’t get your panties in a bunch waiting on it cause that could take another 20 + years.What a friggen bunch of morons.

  3. Charles says:

    This is al talk yap yap. Wall Street is Obamas main campaign funder. We will be die waiting on any government relief. The fight is our own. We need to stand in solidarity and show them we mean business.

  4. John says:

    When you off er to pay a person facing foreclosure $1700.00, what you are actually doing is saying “I’ll pay half your moving expenses to get out of my house”
    This is nothing new, this is an old tactic used by all renters of apartments and houses for years and years.
    It does not stop illegal foreclosures, just makes those living legally in their own homes seem to be squatters or some other bad image.

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