President Obama Declares New Fight Against Mortgage Fraud

by 26 Jan 2012
By The Niche Report
Eric SchneidermanA powerful alliance between the U.S. federal government and the New York State Attorney General to fight against mortgage fraud was announced by the White House early on Wednesday, January 25. President Barack Obama had previously announced on his State of the Union address the night before that he was calling on U.S. Attorney General Eric Holder to create a special unit for the purpose of investigating and prosecuting mortgage fraud at a national level. The next day, New York Attorney General Eric Schneiderman spoke to reporters in Washington about the nomination by President Obama. Schneiderman explained that the new task force will focus on coordinating the efforts of state prosecutors, and he also promised aggressive action.Some political analysts commented that pressure from groups such as MoveOn and the Campaign for a Fair Settlement; two entities that, along with activists and labor union leaders, have called for an investigation into the roots of subprime lending and mortgage-backed securities scheme. President Obama stated that the new unit will "hold accountable those who broke the law." By appointing Schneiderman, a man who has taken a hard line stance against the mortgage lending practices of major lenders such as Bank of America, Obama is pleasing consumer groups who claim to represent the veritable 99 percent and who want Wall Street and the 1 percent to be held properly accountable for their actions.Attorney General Schneiderman has gained a reputation as a staunch opponent of leniency in the proposed settlement currently being negotiated between state attorney generals and the five major mortgage lending banks, including JP Morgan Chase and Wells Fargo. That settlement seeks to impose billions of dollars in penalties against the banks who allegedly engaged in "robo-signing" and other dubious and unethical practices. Schneiderman believes that the settlement goes too far in offering the banks immunity for future prosecution. He was part of the nationwide committee of attorney generals assigned to oversee the matter, but he may have been removed due to his desire to further investigate. With the new appointment to chair the new mortgage fraud investigative unit, Schneiderman is expected to get his wish to conduct thorough investigations into mortgage lending practices at a high level. The new unit will fall under the Financial Fraud Enforcement Task Force, a special group established in 2009 with officials from over 20 government agencies to combat fraud and other white-collar crimes that exacerbated the global financial crisis and the Great Recession. That group has been responsible for the investigation, arrests and prosecutions of individuals who committed mortgage and real estate fraud at the height of the U.S. housing bubble. The new task force with Schneiderman at the helm is expected to aim higher and investigate the major players who may have a hand in abusing the home lending process before the crash.

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