Iowa Partners With Feds To Fight Mortgage Fraud

In a signal that mortgage fraud will likely remain a hot issue well into 2011, federal and Iowa state officials have announced a joint effort to protect consumers and prosecute criminals.

United States Attorney Nick Klinefeldt and Iowa Attorney General Tom Miller have formed the Iowa Mortgage Fraud Working Group, that will target criminals for investigation and prosecution.

On the federal level the working group will utilize the investigative expertise of agencies such as the Federal Bureau of Investigation (FBI) and Department of Housing and Urban Development, Office of Inspector General (HUD-OIG).  Other federal agencies that may participate in the working group include the Secret Service, Internal Revenue Service, United States Postal Inspection Service, and Social Security Administration.

On the state level, the working group includes attorneys and investigators with the attorney general's Consumer Protection Division, as well as the Iowa Division of Banking. Miller is currently leading a nationwide mortgage foreclosure investigation, in conjunction with 50 state attorneys general and state banking and mortgage regulators in more than three dozen states. 

Improper practices

The effort, which was launched October 13, began with inquiries into so-called "robosigning" practices by several mortgage companies, and has since broadened into identifying and addressing additional alleged improper foreclosure practices.

For the past three years, Miller has also lead more than a dozen state attorneys general and state banking regulators in the State Foreclosure Prevention Working Group, which has monitored foreclosure data and has recommended and helped implement foreclosure prevention efforts. 

In addition, Miller helped launch Iowa's Mortgage Help Hotline, which offers assistance to consumers facing foreclosure.  Miller has also pursued several mortgage fraud cases against companies and individuals who have tried to take advantage of Iowans.

"This new partnership between my office and the United States Attorney's office will help us take some of the most egregious mortgage fraud cases to the next level," said Miller."There are some situations where civil enforcement efforts simply are not enough to punish the wrongdoers.  We look forward to working with the United States Attorney to ensure that criminal enforcement tools are also available."

Immediate impact

Klinefeldt said the partnership with the state will have an immediate impact on the effectiveness of federal efforts to combat mortgage fraud. 

"Attorney General Miller has been a nationwide leader in using civil enforcement tools to combat mortgage fraud," he said. "This relationship will allow federal prosecutors and investigators to obtain the benefit of the experiences of the attorney general, get leads on new cases, and refer cases back to the state in instances where federal criminal prosecution is not warranted but state civil or criminal enforcement efforts might be."

 The U. S. Attorney has already prosecuted numerous criminal cases in the Southern District of Iowa involving mortgage fraud.  In 2010 alone, the U. S. Attorney has prosecuted lawyers, real estate agents, mortgage brokers, bank officers, and borrowers for their roles in mortgage fraud schemes. 

Klinefeldt said he expects the relationship with the attorney general to result in the prosecution of even more criminal mortgage fraud cases. 

"Our standards for deciding who to criminally prosecute will remain as high as ever," he said.  "But we expect the partnership with the Attorney General to result in finding more targets whose conduct satisfies those high standards." 

The FBI has typically taken the lead in federal investigations of mortgage fraud in the Southern District of Iowa.