The FBI is currently investigating 17 firms involved in the mortgage lending industry, bureau officials told Reuters News in an exclusive interview. The bureau had previously acknowledged it was investigating 16 firms. Officials say the criminal probe could take years to complete.
The FBI has assigned 100 agents to investigate corporate fraud aspects of the housing crisis, including subprime lending and insider trading. Another 150 are looking at related securities fraud, and 153 are looking at loan originations, says Neil Power, economic crimes unit chief of the FBI’s financial crimes section.
The majority of cases are in New York and California, Powers says.
The opportunities for fraud existed all along the chain from mortgage origination to the investors in mortgage-backed securities. But the problems begin in loan applications that required minimal or no documentation, the officials said.
"That's the start of the fraud right there," said Mike Cuff, a supervisory special agent in the economic crimes unit.
Source: Reuters News, Randall Mikkelsen (03/18/2008)
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