When the subprime mortgage crisis exploded in 2007 and helped to spark the nation's most recent recession, lawmakers, experts and the general public appeared to be similarly outraged at many of the unethical and abusive lending practices that had been adopted by the banking industry. When many of these unethical and illegal practices continued for years to come, the U.S. government vowed to crack down on banks that drafted defective mortgages, engaged in illegal foreclosure practices and otherwise took advantage of homeowners.
However, a report recently released by the inspector general of the Justice Department insists that the federal government has yet to live up to its promises. Rather than vigorously prosecute banks for unacceptable practices, the Justice Department has failed to properly investigate hundreds of cases. According to the department's internal watchdog, hundreds of these inadequately investigated cases have been officially closed.
Individuals and families have had their lives turned upside down as a result of many abusive lending practices continually embraced by the banking industry. However, the inspector general’s new report reveals that the F.B.I. has categorized mortgage fraud as the agency’s lowest priority for criminal investigation.
The inspector general clarified that, “Despite receiving significant additional funding from Congress to pursue mortgage fraud cases, the F.B.I. in adding new staff did not always use these new positions to exclusively investigate mortgage fraud.”
This illuminating report should inspire the F.B.I. and other federal agencies to act urgently and definitively on the issue of mortgage fraud. The American people deserve no less than this reinvigorated approach.
Source: The New York Times, “U.S. Criticized for Lack of Action on Mortgage Fraud,” Matt Apuzzo, March 13, 2014