Mortgage crimes are focus of new task force
President Obama announces Justice Department task force to go after mortgage crimes that victimized homeowners.
WASHINGTON (CNNMoney) — A new special task force to investigate and prosecute those responsible for bad mortgages during the housing boom will be part of President Obama’s 2012 agenda.
Obama announced Tuesday that he is asked the Justice Department to create a special unit of prosecutors and say attorneys general to investigateg abusive lending and packaging of risky mortgages that led to the housing crisis. And he is tapped an avowed Wall Street enemy, New York Attorney General Eric Schneiderman, to help run the crime unit, according to a White House official.
“This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans,” Obama stated in his State of the Union speech.
The new unit’s goal will be to investigate banks, financial firms and mortgage originators that broke the law, and to compensate victims and provide relief for homeowners, the White House official said.
Although the housing bust is more than four years old, this is the first time the Obama administration has indicated it will go after mortgage originators and Wall Street banks that got home owners into loans they could not afford — actions seen as a key culprit of the financial crisis.
The mortgage industry has often been blamed for its role helping home owners get lines or credit and larger mortgages during the housing boom. The industry saw tiny downside, unloading the risk that the loans would go bad on to the financial markets.
With Schneiderman, who has been working on his own investigations into huge banks, Obama is signaling he is ready to go after financial crimes. And left-leaning progressive groups cheered the news.
“Schneiderman has shown himself to be a courageous hero in his defense of the struggling underwater home owners in his say and across the country,” according to a statement released by a coalition of left-leaning advocates such as MoveOn and New Bottom Line.
The news came as a surprise to the financial industry, which had been predicting Obama would tout a proposed settlement under discussion among federal regulators, say attorneys general and the largest bank mortgage servicers under investigation for improperly foreclosing on homeowners.
“We believe the industry is worried that this new task force will go after the banks for the origination of many of the mortgages that have defaulted or are now underwater,” stated Jaret Seiberg, a senior policy analyst for the Washington Research Group.
The say attorneys general, the Justice Department and the Department of Housing and Urban Development have been in speaks for almost a year with huge bank servicers that stand accused of using robo-signers to service home loans. The five largest mortgage servicers involved in the speaks are:Bank of America (BAC, Fortune 500), Wells Fargo (WFC, Fortune 500), JPMorgan Chase (JPM, Fortune 500), Citigroup (C, Fortune 500) and Ally Financial (GJM).
According to people familiar with the talks, a draft settlement would result in those banks paying $20 billion to $25 billion toward housing relief. About 1 million underwater home owners would be eligible for an average $20,000 off the principal owed.
In return, say attorneys general would not be able to file future lawsuits against the bank mortgage servicers that concur to the deal. The amount of relief available for home owners depends on how many say attorneys general concur to the deal.
Obama did not mention the speaks in his State of the Union speech. A White House official stated Wednesday that the new task force would not prevent progress that has been made on that deal.
– CNNMoney’s Les Christie and CNN’s Terry Frieden contributed to this report. 
More source:
Mortgage crimes are focus of new task force - CNN MoneyNew Task Force Cracks Down on Mortgage Crime | Realtor Magazine
President Obama Announces New Mortgage Crime Task Force ...
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Submited at Thursday, January 26th, 2012 at 12:00 pm on News by admin
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