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Mortgage Fraud, No Big Deal

Mortgage fraud  --  that is, millions of non-credit worthy mortgage applicants lying about their income, assets and debt, and bankers turning a willfully blind eye to it  --  was the major cause of the housing crisis several years ago, and the ensuing financial collapse that ushered in the Great Recession.

The following massive destruction of wealth, lowered incomes, persistent high unemployment and slow growth during the so-called "recovery" have caused considerable suffering, particularly among the young looking for work.  My nephew, for example  --  a highest honors graduate of Duke this last May and a great kid  --  couldn't get a job until two months ago.

So you would think prosecuting mortgage fraud cases would be a front-and-center item for the Justice Department, right?

Think again.

The New York Times reports:

Four years after President Obama promised to crack down on mortgage fraud, his administration has quietly made the crime its lowest priority and has closed hundreds of cases after little or no investigation, the Justice Department's internal watchdog said on Thursday.

The report by the department's inspector general undercuts the president's contentions that the government is holding people responsible for the collapse of the financial and housing markets. The administration has been criticized, in particular, for not pursuing large banks and their executives.

"In cities across the country, mortgage fraud crimes have reached crisis proportions," Attorney General Eric H. Holder Jr. said at a mortgage fraud summit in Phoenix in 2010. "But we are fighting back."

The inspector general's report, however, shows that the F.B.I. considered mortgage fraud to be its lowest-ranked national criminal priority. In several large cities, including New York and Los Angeles, F.B.I. agents either ranked mortgage fraud as a low priority or did not rank it at all.

OK, bad enough.  But wait, there's more!  It's not just that mortgage fraud, the rampant crime that caused so much damage, got put on the back burner; it's that Eric Holder flagrantly lied about it.  Imagine that!

As the story continues: 

The inspector general focused much of its report and most of its recommendations on fixing internal systems that produced inaccurate data that wildly overstated the government's results.

Mr. Holder, for example, announced in 2012 that prosecutors had charged 530 people over the previous year in cases related to mortgage fraud that had cost homeowners more than $1 billion.

Almost immediately, the Justice Department realized it could not back up those statistics, the inspector general said. After months of review, it became clear that only 107 people were charged.

The $1 billion figure, it turned out, had been drastically inflated. It was actually $95 million, the inspector general said. Yet Justice Department officials repeated those claims for months, even after it was obvious the figures were wrong, the inspector general said.

My goodness.  This puts to shame even the better reported lying Holder did about Fast and Furious.

Still, not all is lost.  At least Mr. Holder is hanging tough against dangerous drugs.


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