I've been reading the diaries on the mortgage mess we've been watching unfolding andjust saw this story.
Federal law enforcement officials are investigating possible criminal violations in connection with the national foreclosure crisis, examining whether financial firms broke federal laws when they filed fraudulent court documents to seize people's homes, according to people familiar with the matter.
The Obama administration's Financial Fraud Enforcement Task Force is in the early stages of an investigation into whether banks and other companies that submitted flawed paperwork in state foreclosure proceedings may also have misled federal housing agencies, which now own or insure a majority of home loans, according to these sources.
There is going to be a task force meeting Wednesday and a White House briefing by HUD Secretary Shaun Donovan and the task force executive director, Robb Adkins.
This seeems to be the major news for banks:
But the federal government also has a lot of money at stake. The Federal Housing Administration and Ginnie Mae, in addition to federally backed mortgage companies Fannie Mae and Freddie Mac, insure home loans. When lenders suffer losses on these loans as homes fall into foreclosure, the government reimburses them.
But if lenders or other mortgage companies have been reimbursed based on false or inaccurate paperwork, the government could seek both civil and criminal penalties, people familiar with the matter said.
No specific target of the investigation has been identified.
BofA and others have been saying in the press this is a small paperwork issue and there is no crisis; but I don't believe them and I'm glad the administration is working through this in addition to the work the state AGs are doing.