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Lending

Three ranking Democrats want answers on damning mortgage fraud audit

Lawmakers think DOJ has been lax in prosecutions

Congress
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Three Democrats are asking to meet with Attorney General Eric Holder to discuss the Department of Justice and its allegedly lax and uneven prosecution of mortgage fraud cases, according to a letter from the three, dated March 17.

U.S. Sen. Elizabeth Warren, D-Mass., and U.S. Reps. Elijah Cummings, D-Md., and Maxine Waters, D-Calif., want to discuss an inspector general report that said the FBI considers mortgage fraud a low priority after the financial crisis.

Cummings is a ranking member of the House Committee on Oversight and Government Reform, while Waters is a ranking member of the Financial Services Committee. Warren serves on the Senate Committee on Banking, Housing and Urban Affairs.

"This report calls into question the Department's commitment to investigate and prosecute crimes such as predatory lending, loan modification scams, and abusive mortgage servicing practices," the three lawmakers wrote of the report released last week by the Justice Department's inspector general.

They want to review the Inspector General’s findings and to identify actions that will be taken to combat fraudulent mortgage practices.

Calls to the Department of Justice were not returned at time of publication.

The inspector general’s report states that the FBI, despite receiving $196 million in funding allocated to investigate mortgage fraud activities, has not made mortgage fraud a priority, and that it is considered low priority or not a priority according to a survey of field offices in Baltimore, New York, Los Angeles and Miami.

The IG report also stated that the DOJ reported inaccurate data regarding the number and scope of the prosecutions pursued.

Last week in Washington, the director of the FBI defended efforts to prosecute firms responsible for the U.S. mortgage meltdown in front of the House Judiciary Committee.

Director Robert Mueller said the FBI has more than 3,000 open investigations into mortgage fraud, 94 task forces and 340 agents assigned to mortgage fraud. More specifically, Mueller told the committee that there are more than 650 active probes into corporate fraud, of which more than 55 are related to the subprime mortgage industry.

"We have had takedowns about every six months, persons arrested for mortgage fraud, securities fraud, corporate fraud. There are ongoing trials in that arena,” Mueller said.

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