Mortgage Fraud | featured news

The insurer AIG is suing Bank of America Corp to recover more than $10 billion of losses from a "massive fraud" on mortgage debt, deepening the morass of litigation faced by the largest U.S. bank.

The Securities and Exchange Commission on Monday accused a New York firm that helped manage complex mortgage securities of defrauding investors as the housing market collapsed.

In a nationwide effort, officials file criminal charges against individuals allegedly responsible for $2.3 billion in fraud. 'These schemes are despicable; they are dangerous to our economy,' Atty. Gen. Eric Holder says.

The New York attorney general has launched an investigation into eight banks to determine whether they misled ratings agencies about mortgage securities, according to a person familiar with the investigation.

President Barack Obama will issue an executive order Tuesday creating an administration-wide task force to crack down on financial fraud following a rise in mortgage scams and high-profile Wall Street trading scandals, an administration official said.

Frustrated by the banks' inability or unwillingness to stop an avalanche of foreclosures, the states are considering lawsuits over the creation and marketing of millions of bad loans as well as the dismal pace of mortgage modifications.

Such cases would have been impossible until recently, because federal regulators had exclusive oversight of national banks. But a 5-to-4 Supreme Court decision in June allowed the states to exercise their own supervision, giving them significant leverage.

Just as Congressional leaders are calling to extend a tax credit for first-time homebuyers, government investigators are reporting widespread abuse.

A mortgage fraud crackdown announced Thursday resulted in the arrests of dozens of people, including six lawyers, seven loan officers and three mortgage brokers in four states.

Amid the mortgage meltdown, regulators are sounding alarms about the potential for fraud in the reverse-mortgage market.

More than 1,000 people were defrauded out of about $70 million by a group advertising the dream of homeownership in what turned out to be a nightmare Ponzi scheme, federal and Maryland officials said Monday.