Mortgage Fraud, Fraud | featured news

A leader of the Hells Angels motorcycle gang was sentenced this week to a year in prison and ordered to pay $130,000 in restitution to SunTrust Mortgage for spearheading a mortgage fraud scheme.

The U.S. government said on Thursday that the biggest U.S. banks will provide $25 billion in relief to distressed homeowners and states, as officials hold lenders responsible for taking illegal shortcuts during foreclosures and other mortgage paperwork.

Goldman Sachs Chief Executive Lloyd Blankfein has hired Reid Weingarten, a high-profile Washington defense attorney whose past clients include a former Enron accounting officer, according to a government source familiar with the matter.

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.

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.

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