Skip to main content

Assistant U.S. AG West: Foreclosure rescue scams on the rise

Sep 16, 2010

The following is taken from a speech delivered by United States Assistant Attorney General Tony West delivered to the Association of Government Accountants’ Internal Control & Fraud Conference on Sept. 16th in Washington, D.C.: "It is always a pleasure to be with my friend and partner in the fight against fraud, HUD Inspector General Ken Donohue. I was sad to learn that you will be retiring next month. You have been a great public servant and I value the strong relationship and partnership that exists between HUD and the Department of Justice. I look forward to building on that relationship. And it is good to be here with Fred Gibson, Deputy Inspector General for the Federal Deposit and Insurance Corporation. As many of you know, with record numbers of banks failures over the last two years, the FDIC has seen the housing and banking crisis up close. Let me also thank the Association of Government Accountants for having me here today to discuss the Department of Justice’s efforts to combat mortgage fraud. As some of you might know, this is the second opportunity I’ve had to the privilege of being with you, this organization that has, for the last six decades, been at the forefront of establishing high professional, educational and ethical standards to improve the government financial management profession and advance government accountability. You are frequently on the frontlines of preventing fraud in government programs; and, when fraud does occur, we in law enforcement often look to you–auditors and accountants–to help us make sense of what went wrong and how to correct it. So, thank you again for your service, and I’m really honored to speak with you this morning. Now, as Ken mentioned, I am the Assistant Attorney General for the Civil Division, and in that capacity I oversee much of the federal government’s civil litigation across the country: ►Cases that involve our national security and keeping the American people safe; ►Cases that involve defending the Executive Branch, federal agencies and the Constitutionality of Congressional statutes; ►And cases that involve the Justice Department’s efforts to protect consumers and recapture billions of dollars lost to fraud, like healthcare fraud and mortgage fraud. Especially mortgage fraud. Because, despite some signs that our economy is on the mend, I don’t have to tell you what a serious problem mortgage fraud is. It’s the type of fraud that strikes when people are most vulnerable, when they’re facing the loss of what is often the most important purchase of their lives. Around the nation, approximately 1.7 million homeowners received foreclosure-related warnings in the first half of this year alone. And, it is estimated that more than one million households will lose their homes to foreclosure this year. And often the so-called help comes in the form of bogus claims to save a person’s home that only result in a person losing the title to their house. That’s why from Day One, President Obama and Attorney General Eric Holder made protecting America’s working families from financial fraud—and especially mortgage fraud—one of their top priorities. At the core of this effort is the Financial Fraud Enforcement Task Force, an unprecedented partnership among 20 federal agencies, state attorneys general and local law enforcement established by the President last year. Through this multi-agency, federal and state task force, we are holding accountable not just those responsible for the corporate fraud that created our current financial crisis, but also those responsible for the financial fraud that affects everyday, working families. And we recognize that no one agency or state can do this job alone, tackling the current financial crisis requires a coordinated, aggressive response that draws upon the full panoply of resources and talent available at all levels of government. Now, as part of this Task Force, we have established the Mortgage Fraud Working Group—a group of federal agencies and co-chaired by Ken, me, and representatives from the FBI and the National Association of Attorneys General. Together, we are marshalling the government’s civil and criminal capabilities to uncover mortgage fraud schemes and hold those who are behind the fraud accountable to the fullest extent of the law. So what has the Mortgage Fraud Working Group done in the nine months since we were formed? We’ve focused on four things: listening and learning, action, public awareness and partnership. First, we’ve been listening and learning, because mortgage fraud isn’t the same everywhere; it’s as different and diverse as the communities in which it exists. So over the last several months, the Working Group has held Mortgage Fraud Summits throughout the country, public sessions where we’ve heard directly from victims of mortgage fraud, as well as those community advocates who are working to confront and combat mortgage fraud in their communities. We heard from the business communities, from law enforcement and others who are seeking creative ways to stop mortgage fraud in their cities. And we went to places that have been particularly hard hit by the housing crisis and have, as a result, become epicenters of mortgage fraud: Detroit; Phoenix; Miami; and later this month we’ll be in California. And we’ve heard recurring themes about the trends in mortgage fraud as we’ve held these summits. Things like: ►Mortgage fraud continues to rise throughout the country; ►According the FBI’s most recent report, mortgage fraud has risen for the last six consecutive years; ►We heard repeatedly that fraudsters are migrating OUT of origination fraud, because fewer new mortgages are being underwritten, and moving IN to loan modification and foreclosure rescue scams. Indeed, the FBI reports that these types of fraud are "increasing as perpetrators seize opportunities created by the current housing crisis and the more than 2.1 million properties in foreclosure." And, in perhaps the most disturbing trend, fraudsters are now targeting the elderly through reverse mortgage scams (taking those last dollars so sorely needed by so many in the sunset of their lives). And in part as a result of what we learned from community advocates and law enforcement around the country, we did the second thing: we acted. Earlier this summer we announced the results of a nationwide mortgage fraud enforcement sweep, called "Operation Stolen Dreams." This operation targeted mortgage fraudsters throughout the country and was the largest collective enforcement effort ever brought to bear in confronting mortgage fraud. ►Over 1200 criminal defendants nationwide, and ►Nearly 200 civil enforcement actions resulting in the recovery of more than $147 million ►And we are continuing our enforcement work, aggressively pursuing mortgage fraud with the full panoply of civil and criminal tools available to us. Third, public awareness. We know that enforcement alone can’t solve this problem and that the best offense in this arena is prevention. That’s why we are also reaching out to the public through efforts like our new Web site,, which is a one-stop shop for the American people to learn how to protect themselves from fraud and to report it wherever—and however—it occurs. And fourth, partnership, because we know that no one agency or official can solve this problem acting alone. So the Mortgage Fraud Working Group has partnered with Fannie Mae, Freddie, Mac, the Lawyer's Committee and NeighborWorks America to launch a consumer-friendly Website,, which supports national, state and local law enforcement efforts. So that’s a quick sketch of what we’re doing. I will continue to work with my colleagues at the Justice Department and throughout law enforcement to devote the investigative and legal resources, time and energy necessary to support our aggressive, anti-fraud, consumer protection agenda.
About the author
Sep 16, 2010
Building A Digital Bridge Between Separate Revenue Streams

Menu cloud-based technology capitalizes on the entire borrowing cycle

Economists Less Confident Rates Will Drop Following Fed Decision

After sixth consecutive month with no change, the likelihood of cuts in 2024 feels "more out of reach."

FHFA Final Rule Released

Rule codifies equitable housing programs, GSE Plans

FDIC Announces Closure Of Republic First Bank

The Philadelphia-based lender's 32 branches will now be served by Fulton Bank

Mortgage Servicers Added To Junk-Fee Naughty List

New release from CFPB lays out areas of improvement, and concern, for mortgage servicers.

In Wake Of NAR Settlement, Dual Licensing Carries RESPA, Steering Risks

With the NAR settlement pending approval, lenders hot to hire buyers' agents ought to closely consider all the risks.