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Paul Kiesel
Paul Kiesel
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Crooked Mortgage Brokers and Operation Malicious Mortgage

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On the same day that two Bear Stearns executives were arrested, the FBI announced that 400 people have been charged with mortgage fraud. The FBI has drastically increased its efforts, since March 1, to combat mortgage fraud, devoting 180 agents to 42 task forces.

This is only the beginning of the avalanche of information we’ll receive regarding mortgage fraud. Since Bear Stearns collapsed in March, many thought that FBI inquiries would yield evidence of criminal activity contributing to all of this financial tumult. It has, and it’s certain that the FBI will be arresting hundreds more and revealing many fraudulent practices that have contributed to the subprime meltdown.

Currently, the FBI is investigating about 1,400 more cases of potential fraud. Most of the arrests from yesterday revolved around small-scale schemes, and, other than the two crooked executives at Bear Stearns, it remains to be seen which other major lenders will be publicly outed and guilty of “malicious mortgage” activity. But just like the propensity of TILA disclosure fraud that has taken place over the last few years, I’m sure other lenders like Bear Stearns were as ignoble in their lending practices, particularly in regards to securitized-mortgage fraud, so it’s almost certain that a few other major mortgage lenders will be taking a hard, pride and greed driven fall, much like a Shakespearean king.

We’ll just have to wait and see how many more crooked mortgage brokers, real estate agents and other industry officials the FBI is able to target and arrest. Hopefully, this will prompt Congress to pass laws that allow for more oversight and transparent rules when it comes to mortgage lending.