The fallout from the real estate crisis will continue for years to come. After all, the numbers are staggering. There have been about 5 million homes foreclosed upon in the last five years. Another 11 million homeowners are underwater are their mortgages. And in many areas of the country, prices continue to go down.
This daunting downturn has implications for mortgage fraud cases in Louisiana and across the country.
When so many subprime loans that had been repackaged into complicated mortgage-backed securities started going bad in 2007, the big banks started looking for bailouts from the U.S. government, sometimes known as Uncle Sam.
Sam provided a bountiful bailout, on the premise that it was needed to keep credit flowing to the global economy and prevent a global depression.
Now, however, federal prosecutors seem ready to try to hold rank-and-file individuals from the real estate industry responsible for the system-wide problems that led to the crisis. Most real estate agents, mortgage brokers, appraisers and other professionals at ground level did nothing illegal to cause the over-headed real estate game whose bubble burst nearly four years ago.
And yet the U.S. Department of Justice announced on February 13 that its second-highest budget priority of the year would be a $55 million increase in funding “for investigating and prosecuting financial and mortgage fraud.”
This request comes on the heels of a multi-million dollar settlement already reached between state governments, the federal government, and five major banks over foreclosure practices. Part of that settlement included the initiation of a state-federal group to further investigate allegations of fraud.
Source: “Department of Justice FY 2013 Budget Request,” Sentencing Law and Policy, 2-13-12