Mortgage Fraud Summit Reveals Both Systemic Fraud and FBI’s Seeming Blind Eye

Some excerpts from the report…

To combat mortgage and foreclosure fraud, we first need to understand the nature of the fraud. There are the small-potato schemes — the loan modification-aid scams, or the scams of fraudsters busting into foreclosed properties and renting them out. Yes, people get burned this way, but going after these frauds is like prosecuting the drug dealer on the corner, if you will.

The true nature of the fraud — the kingpin level, so to speak — is found in the current nature and structure of the financial / mortgage / foreclosure system itself. And that level of investigation is what the FBI carefully tip-toed around discussing at Wednesday’s Mortgage Fraud Summit that took place in Ontario, Ca.

California is one of the epicenters of mortgage trouble. According to the FBI, 24% of properties in the US are now underwater. Of those properties, 40% sit in California or Florida. San Bernardino County has one of the highest rates of foreclosures in the nation — one in 114 homes is in foreclosure. To help homeowners battling to save their homes, two grassroots groups — nonprofit Rhema Economic Research and Development and the Grassroots Assembly for Mortgage Fraud Victims — brought in an impressive array of authors and panelists.

What became clear from the presentations and discussion is that the FBI now seems more concerned by the fraud at the bottom of the chain instead of spending their energies and resources investigating the control fraud becoming evident throughout the entire system.

Sharon Ormsby — chief of all financial / white collar crimes for the FBI — came all the way to California to tell the crowd that robo-signing and foreclosure mills are mere “issues of concern.”

But she lost me and the audience: Where’s the action on the institutions committing this systemic fraud so many are confronting right here, right now? What are all the task forces and cross-department working groups doing to help those about to lose their homes because of it?

“Is BofA being investigated now?” an audience member asked Ormsby. … Silence.

Any criminal investigations? Any kingpin bankers about to be thrown in jail? No mention.

When asked about the culpability of the CEOs presiding over and reaping billions from this fraud-filled system, Ormsby simply fired back “Where’s the proof?”

The audience audibly winced.

We had just heard heavy-hitting speakers William K. Black and Nomi Prins go into great detail about where the fraud occurs and how the Ponzi scheme works.

But where’s an Eliott Ness when you need one?

Has the fraud come from the top? That’s been the consistent conclusion of various State Attorney General investigations.

Where is the fraud? William K. Black — beamed in via Skype — explained the recipe for these control frauds. “Control fraud” is a concept developed by Black to describe frauds in which the people who control seemingly legitimate organizations can commit fraud with impunity.

As William Black put it:

“[Lenders] start creating false statements, false affidavits. That means a false statement under penalty of perjury. That means a felony. That means tens of thousands of cases every month of Bank of America and other entities like it committing felonies.“

Correct me if I’m wrong, but I think that any likelihood that tens of thousands of felonies are being committed every month by major banking institutions via false affidavits should damn well get the issue off the FBI’s “concern” pile and onto the “immediate action” burner.

Ormsby also hinted at a potential avenue for citizen action: She is obligated to act on issues brought to her by a member of Congress. So homeowners and others who care about clearing the control fraud from this system can apply pressure to those in Congress likely to be receptive and tell them to give Ormsby a call: put mortgage and foreclosure control fraud on the FBI’s front burner.

You can read this report in its entirety here…

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