FBI director: Mortgage fraud is a ‘substantial problem’
Friday, February 1, 2008 1:03 PM PST
HONOLULU (AP) — FBI Director Robert Mueller on Thursday said the agency was committed to investigating and prosecuting companies involved in mortgage fraud and other violations in connection with home loans made to risky borrowers. Mueller said probes were being conducted across the country, including in Hawaii, where he stopped on his way back from a trip through Asia.
‘‘There is not a state that does not have some investigation,’’ he told reporters at the FBI office in Honolulu. ‘‘It is a substantial problem but we’ve been through problems like this in the past.’’
The bureau on Tuesday disclosed it was working with the Securities and Exchange Commission to investigate 14 unidentified companies, from mortgage lenders to investment banks, for possible accounting fraud, insider trading or other issues connected to subprime mortgage lending. Mueller declined to identify the companies. The FBI allocated substantial manpower and resources to address the Saving and Loan crisis in the early 1990s and corporate fraud earlier this decade and Mueller said he was prepared to do the same to address fraudulent lenders.
‘‘I anticipate that we will see the same extensive investigations that we saw then with successful prosecutions following those investigations,’’ Mueller said. As the nation’s housing crisis worsens, there has been a dramatic spike in the number of mortgage fraud cases under investigation. An agency spokesman said 1,210 such cases are open, up from roughly 800 a year ago.
The FBI is looking into the practices of so-called subprime lenders, as well as potential accounting fraud committed by financial firms that hold these loans on their books or securitize them and sell them to other investors.
Mueller visited China and Cambodia during his trip. In Cambodia, he inaugurated an FBI office at the U.S. Embassy in Phnom Penh and said the country’s recent fast-paced economic boom makes it crucial for the U.S. to work with the country in fighting terrorism and global crime.
