"Administration Used Dramatically Inflated Statistics To Defend Mortgage Fraud Efforts"
The Obama administration’s yearlong investigative push on mortgage fraud produced just one fifth of the criminal charges and identified just one quarter of the victims claimed by Attorney General Eric Holder in a 2012 speech, the Federal Bureau of Investigations (FBI) announced late Friday. The news that the administration radically overstated its prosecutorial accomplishments related to mortgage abuses comes 10 months after the Distressed Homeowner Initiative had run its course.
The program supposedly initiated criminal charges against 530 people over cases involving $1 billion in mortgage-backed securities and 73,000 victimized homeowners. In reality, the program brought 107 charges involving $95 million in assets and 17,185 victims. The discrepancies mostly come from the Justice Department taking credit for cases begun prior to the yearlong window of the initiative. Holder used the inflated numbers in a speech about the initiative on October 9, 2012, at the close of the fiscal year in which it had been active. Bloomberg News reporters Phil Mattingly and Tom Schoenberg discovered some of the errors at the time, but another Bloomberg writer says he was stonewalled by the administration in his efforts to obtain data to support Holder’s claims. The scope of the administration’s exaggeration was not known until Friday’s FBI release.
The corrected numbers reinforce a common view among housing activists and mortgage fraud analysts that the Obama administration has been more interested in damping criticism than in aggressively investigating mortgage fraud. Much of that criticism has been aimed at another “task force” announced with great fanfare in the 2012 State of the Union address and helmed by New York Attorney General Eric Schneiderman, whose reputation as unusually tough on Wall Street abuses made him a favorite figure among housing advocates. Months after Obama announced Schneiderman’s effort, the group had yet to hire staff or even set up an office space. A year on from the speech, the task force’s largest accomplishments involved cases private attorneys had already built before coming to join Schneiderman’s staff just in time to roll out large prosecutions under the banner of the presidential initiative. Meanwhile, the $25 billion National Mortgage Settlement that Schneiderman agreed to join after being put in charge of the task force has proven a failure, and banks have been able to manipulate the rules of various foreclosure-mitigation programs.
Frustration over the Obama administration’s tendency to look forward at the housing market’s future rather than back at its past abuses has bubbled over this summer. Seven foreclosed grandmothers were arrested after protests and sit-ins at both Justice Dept. headquarters and the law offices of Covington and Burling, a Wall Street defense firm that has a revolving-door relationship with the Obama legal team. In Congress, Holder has been accused of holding a “too big to jail” mentality about major mortgage frauds – something his recently-departed Criminal Division chief Lanny Breuer hinted at in a September 2012 speech about the impact fraud prosecutions could have on “innocent employees” of the abusive firms. The administration has pushed back on such criticisms aggressively in the past, but Bloomberg reported Friday that FBI officials declined to comment on the revised figures.