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More Than 400 Held in FBI Mortgage Sweep


The Justice Department has just concluded the latest phase in an enormous crackdown on mortgage fraud. The sweep was named Operation Malicious Mortgage. The FBI arrested more than 400 real estate agents, brokers, appraisers and developers in the past three months alone. The message is clear: the penalty phase of this mortgage crisis has officially begun.

NPR's FBI correspondent Dina Temple-Raston has been reporting the story. She joins me now.

Dina, now we saw this week the Bear Sterns' hedge fund managers arrested in New York and then the announcement of this wider sweep. What kind of people are the FBI targeting?

DINA TEMPLE-RASTON: Well, this broader operation has people from just about every aspect of the real estate transaction in the crosshairs. They run the gamut from straw buyers who are people who put themselves on a mortgage application saying they intend to live in a house but never do, to run-of-the-mill real estate people; real estate agents, mortgage brokers, appraisers, developers. And the FBI basically said the rings had - they busted over the last three months encompassed essentially every part of the real estate food chain. And they estimate that the losses to homeowners and other borrowers who are victims of this at more than $1 billion.

NORRIS: So every part of the real estate food chain. What were these people accused - or what are they accused of doing? What kind of scams are they accused of running?

TEMPLE-RASTON: Well, the FBI officials I spoke to said mortgage fraud was just like any other kind of bank fraud, except it has something to do with the real estate market. Recently, for example, officials have been arresting people for home equity lines of credit scams. Now you've heard about people stealing your identity to open up credit cards. Instead of a credit card, scammers have been zeroing in on people who they think have a lot of equity in their homes. And they steal their identities and then go online and get a home equity line of credit on that person's house. And then they take the money. And the FBI says the possibilities seem to be endless.

NORRIS: So even with the downturn in the market, it sounds like there are still opportunities for scam artists and fraud?

TEMPLE-RASTON: Indeed, the FBI said that in a down market, there are as many opportunities for scam artists as there are in an up market. Now, quite a few of these arrests the past couple of months have been related to something called a foreclosure rescue scam. Like people who are essentially - can't make their mortgage payments. Someone I met in Brooklyn not long ago, her story was typical. She was injured, got behind on her mortgage payment and was looking for help. And she saw an ad in the paper from someone who said he was a foreclosure consultant. He said he could help her get a mortgage at a lower rate. And she was under the impression that she was refinancing her home.

She ended up, in fact, signing a massive number of papers, one of which she didn't know at that time, was the title of her house. So instead of refinancing her home, she ended up selling it. It's these kinds of scams where lots of are people are involved. You have mortgage - bogus mortgage brokers, you have appraisers who are on the take, you even have lawyers who are in on the scam. And those are the people that the FBI was trying to nab over the last couple of months.

NORRIS: And just quickly, Dina, before we let you go, is this a national campaign?

TEMPLE-RASTON: It is a national campaign. The FBI said over 80 percent of their offices were involved in this particular operation. And just in a short amount of time, they charged 406 defendants - a little less than half of them have already been convicted - and more than 80 of them are already serving sentences. So this is a really big sweep.

NORRIS: This is NPR's FBI correspondent, Dina Temple-Raston. Dina, thanks so much.

TEMPLE-RASTON: You're welcome. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Dina Temple-Raston is a correspondent on NPR's Investigations team focusing on breaking news stories and national security, technology and social justice.