Fraud, Mortgage Crisis | featured news

Two former Bear Stearns hedge-fund managers have been acquitted of lying to investors about the implosion of the subprime mortgage market.

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.

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