California & Nevada join forces to fight mortgage fraud
California and Nevada, the two states hit hardest by the foreclosure crisis, are teaming up to combat mortgage and foreclosure fraud.
The joint mortgage investigation alliance, announced yesterday by California Attorney General Kamala Harris and Nevada Attorney General Catherine Masto, will help the two neighboring states pool resources – including sharing information, witnesses, reports, litigation strategies, and subpoenas – to expedite investigations into alleged mortgage and foreclosure misconduct.
The investigations will cover fraud committed during the mortgage origination, servicing, and securitization as well as predatory practices during the foreclosure or loan modification process.
“The mortgage crisis is a man-made disaster that has taken a heavy toll on the country, but it saved its worst for California and Nevada,” said Harris. “The mortgage crisis is a law enforcement matter, and we will prosecute to hold accountable those who are responsible and also protect the homeowners who are targeted for fraud.”
Nevada and California rank top in the nation for the highest percentage of homes in foreclosure. According to data released by RealtyTrac, 1 out of every 180 properties in Nevada entered the foreclosure process in October; California came in second with 1 out of every 243 properties.
As a result, Nevada has seen a rise in property rental scams in which con artists would rent out vacant homes to unsuspecting renters without the knowledge of the foreclosed homeowners.
“The size and scope of these scams and the complexity of the criminal enterprises mandates a large investment of investigative and prosecutorial effort,” said Masto. “Through the alliance, we’re combining forces, resources, and resolve to ensure a fair outcome for our state and our homeowners as quickly as possible.”
Furthermore, the non-judicial foreclosure process in California and Nevada means homeowners could lose their homes in as little as nine months, making distressed homeowners vulnerable to predatory practices by attorneys, brokers, and financial advisors who claim they can stop foreclosures. However, most of time, the homeowners would lose their homes after paying thousands in upfront fees for services that yielded little or no help.
Earlier today, Harris’ office announced the arrest of two Southern California men who allegedly collected $6 million in advance fees but never performed the loan modification services promised to thousands of homeowners around the country. Curtis Melone of Huntington Beach and Christopher Fox of Laguna Niguel were charged with 37 felony counts that include conspiracy, grand theft, and unlawful collection of advance fees.
The California-Nevada alliance was created just months after Harris bowed out of national settlement talks – led by Iowa Attorney General Tom Miller – with the country’s five biggest mortgage institutions: Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase & Co, and Wells Fargo & Co.
Harris cited the “inadequate” settlement proposals – which called for a broad release of claims but without properly investigating the conduct of the mortgage institutions – as the reason why she left the multi-state negotiations.
“My concern is California. When we were at the table during the multi-state negotiations, the discussion in terms of what was being offered was insufficient to really bring a fair deal to California,” said Harris. “Perhaps it’s my bias as a prosecutor, [but] we need to know everything that happened or enough to be able to evaluate a settlement discussion in a way that can determine that it’s proportionate to the harm and proportionate to the wrongdoing caused our state. That was one of the other reasons that we walked away.”
- WhatTheFolly.com: Transcript of California AG Kamala Harris’ statement on the joint mortgage investigation alliance
- WhatTheFolly.com: Transcript of Nevada AG Catherine Masto’s statement on the joint mortgage investigation alliance
- WhatTheFolly.com: Transcript of the press conference Q&A on the California and Nevada joint mortgage investigation alliance
- California Attorney General’s Office: Press release: Attorneys General of California and Nevada announce mortgage investigation alliance
- California Attorney General’s Office: Video #1 of the press conference on Dec. 6, 2011
- California Attorney General’s Office: Video #2 of the press conference on Dec. 6, 2011
- Nevada Attorney General’s Office: Catherine Cortez Masto’s biography
- California Attorney General’s Office: Press release: Attorney General Kamala D. Harris announces arrests in nationwide $6 million loan modification scam