Sen. Elizabeth Warren and others question lack of prosecutions for mortgage fraud

By Reuters
Monday, March 17, 2014 13:58 EDT
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Sen. Elizabeth Warren (D-MA) questions banking regulators. Photo: Screenshot via YouTube.
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By Aruna Viswanatha

WASHINGTON (Reuters) – Three Democratic lawmakers asked to discuss with U.S. Attorney General Eric Holder the Department of Justice’s allegedly uneven efforts to prosecute mortgage fraud, according to a letter dated Monday.

U.S. Senator Elizabeth Warren and representatives Elijah Cummings and Maxine Waters are seeking an audience with Holder over a new watchdog report that said the FBI ranked mortgage fraud as a low threat after the height of the financial crisis, even though the Justice Department had said investigating that crime would be a top priority.

“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.

A Justice Department spokeswoman did not immediately respond to a request for comment.

In recent years the government has been accused of not doing enough to go after the kind of conduct that fueled the housing crisis, including mortgage fraud.

Common mortgage fraud schemes include borrowers lying on mortgage applications or scammers who promise relief to borrowers facing foreclosure.

The report by the Justice Department’s inspector general found that even though the FBI had received $196 million in funding to investigate mortgage fraud activities in the aftermath of the crisis, its offices in New York, Los Angeles and Miami ranked mortgage fraud as either a low priority or not a priority.

The trio asked to review the report’s findings with Holder and discuss steps the agency will take to improve its efforts to prosecute the crimes.

Cummings, the ranking Democrat on the House Oversight panel, Waters, the ranking member on the House Financial Services Committee, and Warren, who is a member of the Senate Banking Committee, have collaborated on similar efforts in the past. Warren has been a vocal critic of what she sees as weak government enforcement against financial misconduct.

Last month Warren and Cummings asked the Federal Reserve to more often have its board of governors vote before the regulator takes major enforcement actions against banks. Fed Chair Janet Yellen has since pledged to increase the board’s participation on major actions.

(Reporting by Aruna Viswanatha; editing by Andrew Hay)

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