California and Nevada are two of the nation's hardest hit states when it comes to the housing collapse. So it may be no surprise they have joined forces to investigate mortgage-related fraud and assist its victims.
By forging an alliance, California and Nevada will combine investigative resources, including litigation strategies, information, and evidence gathered through their respective ongoing investigations, assisting each state as it pursues independent prosecutions. The alliance will link the offices’ civil and criminal enforcement teams, aimed at speeding up investigation of wrongdoing in the two states.
“The mortgage crisis is a manmade disaster that has taken a heavy toll on the country, but it saved its worst for California and Nevada,” said California Attorney General Kamala D. Harris. “The mortgage crisis is a law enforcement matter, and we will prosecute to hold accountable those who are responsible and also protect the homeowners who are targeted for fraud."
In October 2011, Nevada and California ranked first and second, respectively, for the percentage of their housing units that entered the foreclosure process, reflecting a parallel surge in foreclosures in the two states. One in every 180 Nevada properties entered the foreclosure process in October, and one in every 243 California homes received a filing that month.
In 2010, California led the nation with a total of 546,669 foreclosure filings - 4 percent of the state’s housing units - while Nevada led the nation with 9.4 percent of its homes receiving a foreclosure filing, totaling 106,160 units.
“I am pleased to join forces with General Harris to fight against fraudulent mortgage and foreclosure practices that continue to devastate lives, homes, and the economy in Nevada and California,” said Nevada Attorney General Catherine Cortez Masto. “This strong partnership will allow our states to make an even more concerted effort to hold fraud perpetrators accountable and ensure law-abiding homeowners receive justice.”
Non-judicial foreclosure states
The crisis in these Western states is similar because both states share a foreclosure system in which a bank can foreclose on a borrower’s home without court oversight, also called “non-judicial foreclosure.” The attorneys general say the result has created a rich opportunity for predators, leading both states to make mortgage-related law enforcement action a top priority.
Both states have taken unilateral action in the past. In May 2011, Harris formed a Mortgage Fraud Strike Force, now composed of nearly 40 attorneys and investigators, that has launched a wide series of investigations and litigation. It has resulted in multiple lawsuits and the arrest this month of three top officers of a Stockton real estate company who took thousands of dollars in up-front loan modification fees and made false promises to assist struggling Central Valley homeowners with lowering their mortgage payments.
In 2007, Masto formed the Nevada Mortgage Fraud Strike Force that launched a wide series of investigations and litigation into areas including violations of the law related to mortgage lending, servicing, and foreclosure practices and the creation, rating, marketing, sale, and management of mortgage backed securities. The Nevada Mortgage Fraud Strike Force has taken action against predatory “mortgage rescue” companies and individuals claiming to offer services to stop foreclosures.