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May 31, 2011 > Mortgage fraud strike force to protect homeowners

Mortgage fraud strike force to protect homeowners

Submitted By the Office of the Attorney General

Attorney General Kamala D. Harris announced on May 23, 2011, the creation of the Mortgage Fraud Strike Force (MFSF), staffed by Department of Justice attorneys and investigators charged with protecting innocent homeowners and bringing to justice those who defraud them.

Composed of both civil and criminal enforcement teams, the MFSF will monitor and prosecute violations at every step of the mortgage process, from origination of mortgage loans to marketing of mortgage-backed securities to the investing public.

"Californians in search of the American dream all too often found a protracted personal and legal nightmare," said Harris. "Families are losing their homes, while those who perpetrated crimes and frauds against them walk free."

Harris was joined by Los Angeles Mayor Antonio R. Villaraigosa, representatives from U.S. Department of Housing and Urban Development (HUD) and the Center for Responsible Lending and homeowners harmed by unlawful lending, servicing and foreclosure practices, during her announcement.

"We will prosecute, to the fullest extent of the law, those who take advantage of trusting California families. We're setting a high bar for other states and we insist homeowners be protected, respected, and informed," Harris added.

The MFSF will operate out of Department of Justice offices in Los Angeles, Fresno, San Francisco and Sacramento. Twenty-five attorneys and investigators will work together in three teams:

The consumer enforcement team will target scams in the consumer arena, including predatory lending, unfair business practices in originating loans, deceptive marketing, and loan modification and foreclosure consultant scams.

The criminal enforcement team will prosecute criminal frauds associated with the epidemic of mortgage scams, including fraudulent investment and money laundering schemes related to mortgage lending or foreclosure relief.

The corporate fraud team will target misconduct involving investments and securities tied to subprime mortgages, as well as false or fraudulent claims made to the state with respect to these securities.

"With nearly 10,000 foreclosures in the City of Los Angeles last year, this strike force is certain to help countless residents and families from becoming victimized," said Mayor Villaraigosa in support of the new strike force.

"The Attorney General's authority and attention to this issue brings a critical law enforcement component to the table to help stop predatory lending once and for all. I applaud Attorney General Harris for her dedication to employing swift justice to the scam artists who prey on the residents of some of our most economically vulnerable neighborhoods," he added.

California has been hit hard by the foreclosure crisis and by predators who seek to profit from the millions of Californians who are underwater in their mortgages, in foreclosure, or at risk of entering foreclosure.

In 2010, there were foreclosure filings against 546,669 California homes. A total of 2 million California homes are projected to enter the foreclosure process during the period 2009 to 2012. In the past year, the California Department of Justice has received thousands of complaints related to foreclosure scams, mortgage fraud and mortgage servicing practices.

"The fingerprints of illegal activity are all over the foreclosure crisis," said Paul Leonard, director of the California Office, Center for Responsible Lending. "The Attorney General's effort marries the need to punish bad actors for the practices that brought our economy to the brink with the need to eliminate the scam artists who have since attempted to profit from it. Given the economic damage wreaked by foreclosures in California, this initiative is very welcome news."

Harris has long been dedicated to prosecuting mortgage fraud. In 2009, as District Attorney of San Francisco, she launched the first stand-alone district attorney's mortgage fraud unit in California with $1.1M from the U.S. Department of Justice.

Homeowners who have been scammed, can learn more or file a complaint online with the Attorney General's office at http://oag.ca.gov/consumers.

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