Posted by kevin on March 25, 2014 under Foreclosure Blog | Comments are off for this article

It has been a recurring theme in this blog that the courts have done little to level the playing field in foreclosures, and the federal and state governments have done little to bring the big players to justice. It is almost farcical when you read articles in NJ about the US attorney or State attorney general prosecuting individual mortgage brokers when the higher ups on Wall Street and at the big mortgage originators do not get prosecuted, do not go to jail, and do not forfeit their vast fortunes. Maybe in the next life.

Recently, the DOJ inspector general came out with a report on DOJ’s efforts to address mortgage fraud.The time line was 2009-2011. The report stated that even though the President made a big deal about setting out a financial fraud task force headed by Eric Schneiderman, the up to that point carnivorous NY AG, the FBI Criminal Investigation Division rated financial crimes lowest among criminal threats facing the country. Moreover, the FBI rated mortgage fraud as the lowest sub-priority within the financial crimes category.

Last week, Gretchen Morgenson had a sobering article in the NY Times. She cited that inspector general report. She also pointed out that the Justice Department claimed that the task force was a great success with criminal charges lodged against 530 defendants including 172 executives. 73,000 victims who lost over a $1 billion dollars were helped. Of course, those numbers were BS. The number of defendants was revised downward to 107, the number of executives to about 70 and the losses to about $95 million. The article also quoted Senator Kaufman, retired, from Delaware. ( I remember seeing him on C-Span more than once.) He tried valiantly to bring the mortgage fraud issues to the forefront, but he had little support from his fellow senators (or the administration). Kaufman said that not only was mortgage fraud not the top priority of DOJ, it was their last priority.

What happens when people are not punished but rewarded for their bad behavior? More bad behavior not only from the original miscreants, but also eventually from the erstwhile honest people who conclude that crime actually does pay. The Morgenson article ends with the following quote from Senator Kaufman: “The report fits a pattern that is scary for a democracy, that there really are two levels of justice in this country, one for the people with power and money and one for everyone else”.

It is a shame.