More mortgage fraud indictments: Operation Madhouse

Despite the staggering reach of the mortgage scandals: Fannie Mae, Countrywide, AIG, Chris Dodd, it's stories like the one below from the Chicago Tribune that suggests to me that we've only scratched the surface. I think we might see hundreds of similar news reports in the years ahead.

FBI agents have made 24 arrests today in connection with a mortgage fraud investigation they dubbed "Operation Madhouse," authorities said.

The undercover operation, in which law enforcement agents posed as home buyers seeking assistance in financing and closing fraudulent mortgages, yielded nine indictments, each one stemming from a fraudulent mortgage on a property in Chicago or surrounding suburbs, according to a statement from the office of U.S. Atty. Pat Fitzgerald.

The defendants are accused of fabricating tax returns and other financial documents and using false information in applying for mortgages, the U.S. Attorney's office said.

In each of the transactions, the defendants were told that a prospective buyer intended to purchase a property and then default on the mortgage when the deal closed. In reality, undercover agents from the FBI and U.S. Department of Housing and Urban Development posed as the buyers and as paralegals who helped move the transactions along.

Fitzgerald is a very busy guy. Sometime in the next week or so, his office is expected to announce the indictment of disgraced former Governor Rod Blagojevich.

The FBI is very busy too. Earlier today, FBI chief Robert Mueller told the Senate Judiciary Committee that his mortgage fraud case load has almost tripled in the last three years.

Related post:

The mortgage mess and ex-cons

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