"We're not just going to demand repayment, we're going to lock people up."
Check out this fear-mongering nonsense published by the Chicago Tribune over the weekend. So a 45-person enforcement office at the FHFA has the resources and incentive to put strategic defaulters in jail, but mention the name Jon Corzine to the 5,000 prosecutors at the Eric Holder Covington & Burling Department of Justice and they stick their heads so far down in the sand, their asses sprout beach umbrellas.
Mortgage Cops Taking Tough Stance
Strategic defaulters, beware. The feds are coming for you. And they are not happy.
Investigators are searching not only for lenders who have sold materially deficient loans to Fannie and Freddie, but also individuals, including those who reneged on their promises to repay their mortgages. So if you are a "strategic defaulter" who decided it was better to walk away from your obligation than to keep paying for a house that was worth substantially less than you owed, it's time to start looking over your shoulder.
Heath Wolfe, assistant inspector general for audits at the OIG, figures that these mortgage scofflaws owe more than $1 billion to Fannie and Freddie. It's not a lot, perhaps, in the greater scheme of things. But Wolfe's mission is to get back as much of it as he possibly can.
One way the mortgage police can find defaulters is to forage Fannie and Freddie's records for borrowers who failed to mention on their loan applications that they had previous mortgages they did not pay. By Wolfe's estimate, Fannie Mae alone has about 18 million total mortgages on its books.
"We are working with Fannie and Freddie to build a mechanism" to identify strategic defaulters, Wolfe said at a recent mortgage industry conference. So if you walked away from one property and bought another, chances are fairly good that the OIG is going to find you.
If you conveniently left off the fact that you have an outstanding mortgage you failed to pay, or that you have a deficiency judgment against you for the difference between what you owe and what the house sold for at foreclosure, you've committed mortgage fraud. "Debts that haven't been repaid don't just go away," said a Treasury Department official who asked not to be named. "It doesn't matter whether it's on your credit report or not."
If there is any indication that you falsified information on your new loan application, the OIG is "absolutely" going to refer you for criminal prosecution, Wolfe said. "We're not just going to demand repayment," he said. "We're going to lock people up."
And if you think the mortgage cops won't find you, think again. The OIG's investigative office has a 45-person staff, "all experienced people with 15 to 20 years as investigators and prosecutors," according to Peter Emerzian, deputy inspector general in the Office of Investigations. They work out of 11 field offices, soon to be 14, nationwide, and they're looking for you.
So, what about these 2 cases:
And don't forget who is doing most of the defaulting: