The FBI and the U.S. Department of Justice announced the results of their year-long “Distressed Homeowner Initiative” (DHI). According to the press release, the DHI was launched by the FBI in October 2011.
The DHI combined the resources of federal, state and local law enforcement agencies and the efforts of regulatory agencies to target perpetrators both criminally and civilly. More than 200 companies were shut down, and criminal charges were filed against 530 defendants. These cases involved losses of more than $1 billion from more than 73,000 victims across the country.
According to the release, based on intelligence from multiple sources, schemes targeting distressed homeowners emerged throughout the country, and while the majority of FBI mortgage fraud cases involved loan-origination fraud, the agencies noticed a 300 percent increase over the past three years in cases that involved distressed homeowner fraud.
The press release stated that there were an increasing number of lawyers playing primary or secondary roles in the fraud. According to the FBI, in 2010, the Federal Trade Commission issued a rule that prohibited companies that offer loan modification or other types of mortgage assistance services from asking for fees in advance, but with an exemption in some instances for lawyers performing legal work. Criminals targeting distressed homeowners try to circumvent the rules by using attorneys and calling their up-front fees “legal retainers.”
The press release suggests that the federal government is now targeting attorneys in its quest to find individuals and businesses with assets for civil fines for its ongoing investigation into mortgage fraud. Attorneys and businesses should seek advice from effective counsel if they are involved with assisting homeowners with their mortgages in an effort to help preempt any investigations by local and federal law enforcement.