States complain Federal Government tied their Hands in regard to Mortgage Fraud

The Federal Crisis Inquiry Commission also known as the FCIC has held various panel sections over the course of the last several weeks. The panel was to convene on the cause of the financial crisis however a few of the panels last Thursday ended up very focused on mortgage fraud and how the government actually attempted to get around the fraud.

The panels had several members on Thursday that included United States Attorney General, Eric Holder. Mr. Holder addressed the panel of efforts made by the state and federal governments to prosecute current mortgage fraud and future mortgage fraud. He stated that the Federal Bureau of Investigation was currently handling over two thousand eight hundred active cases of mortgage fraud which is an overall increase of over five times that amount from the year 2004.

Mr. Holder also noted that of those cases of mortgage fraud one thousand eight hundred forty two had result in over one million dollars in losses. Mortgage fraud that was still active as of November of 2009 and thereafter show that eight hundred twenty six defendants have pending charges against them.

Assistant Attorney General, Criminal Division, Lanny Breuer alluded to Reverse Mortgage Fraud in his written testimony however this did not seem to be a primary focus of the panel in general.

The panels focused seemed to shift to the Federal Governments role in regard to state attempts to investigate and prosecute mortgage fraud and especially the mortgage fraud which has occurred on a large scale. The topic was introduced by IL Attorney General Lisa Madigan and CO Attorney General John Suthers.

Attorney General for Colorado, John Suthers, in his written remarks stated that the minimum amount of laws that the states had in 2005; the states largely powerless to enforce them against the large national lenders and banks including their affiliates and subsidiaries. He stated that was due to federal regulators taking an aggressive stance to preempt state law and largely with respect to predatory lending and deceptive advertising.

Attorney General for Illinois, Lisa Madigan in her written remarks to the panel stated that regardless of the states aggressive actions against fraud on the state level, federal regulators seemed to do everything within their power to shield large mortgage lenders and banks including their subsidiaries from the state government’s enforcement; particularly in regard to anti-predatory lending laws that are currently on the books. The states have always been the leaders in regulation and enforcement of the worst abuses caused by the mortgage industry.

Attorney General for Illinois, Lisa Madigan in her panel testimony further went on to say that prior to the crisis federal regulators had little or no interest in exercising their regulatory authority and worse hampered state authority. She stated that it seemed very unclear what recommendation would emerge from this FCIC investigation.

The Federal Crisis Inquiry Commission is scheduled to have a report completed by December 15, 2010. The cause of the crisis seems clear to the average American Homeowner fraud on a large scale was happening. The mortgage industry, Wall Street, State and Federal Governments took a blind eye to it all and now they have convened a panel to address what everyone already knows.