Holder delivers more money to fight Arizona mortgage fraud at summit with local prosecutors

US AG brings more money to fight AZ mortgage fraud

PHOENIX — U.S. Attorney General Eric Holder delivered more resources to fight mortgage fraud in Arizona and across the nation Thursday, saying $8 million will be used to beef up investigation teams this spring.

Holder made the announcement during a break in a daylong meeting of the federal Financial Fraud Enforcement Task Force, which was created to coordinate efforts to battle fraud by local, state and federal law enforcement agencies. The money included $1.7 million for efforts in Arizona, one of the states hardest hit by mortgage crimes.

Task force members were in Phoenix to hear about emerging trends in mortgage fraud from professionals who work in the real estate and mortgage industry, and community organizers and lawyers who help homeowners struggling to keep their homes. Members include senior Justice Department prosecutors, FBI officials and officials with the Department of Housing and Urban Development.

Advanced technologies, new communication tools and top federal law enforcement officials are focused on preventing, prosecuting and punishing mortgage fraud, Holder said.

“We will use information gained here in Phoenix — and in other epicenters of mortgage fraud — to focus and strengthen our law enforcement activities,” Holder said. “Mortgage fraud schemes must be stopped in their tracks, and those willing to exploit our national financial crisis for personal gain will be brought to justice.”

Real estate professionals who briefed task force members outlined new and emerging fraud trends, including the “flopping” of short-sale properties.

That’s a technique where someone gets two price opinions from brokers, giving the low one to the bank arranging a short sale of a home nearing foreclosure and the high one to a potential buyer, said Holly Eslinger, president of the Arizona Association of Realtors.

Such techniques can net an unscrupulous buyer tens of thousands of dollars while shorting the bank and homeowner and taking advantage of the subsequent buyer, she said.

A real estate professional for more than 30 years, Eslinger said what’s happening now isn’t new or unique. She said similar scams cropped up in the late 1980s, the last time the nation saw a huge price collapse and wave of foreclosures.

“When people get in trouble there is always someone to take advantage of them,” Eslinger said.

Other professionals urged increased scrutiny of valuation reports done by non-appraisers and loan modification schemes that prey on the most vulnerable homeowners.

Ben Wagner, a task force member who is the U.S. attorney for central California, said different parts of the country are seeing different kinds of fraud.

“It’s kind of a moving target depending on the market,” he said. “Obviously this crisis is not something that we are going to be able to prosecute our way out of, but it is one part of the solution.”