Tackling mortgage fraud

The Justice Department is spending a lot of time and resources these days going after those who have committed mortgage fraud. In fact, the department has issued more than 400 indictments since March.

 The Justice Department is calling its mortgage-fraud investigation “Operation Malicious Mortgage.” And, apparently, it’s far from being over, despite the high number of arrests already made.

Investigators have arrested mortgage loan officers, home builders and real estate agents, all of whom have participated in a variety of mortgage scams, everything from setting up straw buyers to stealing people’s identities as a way to tap illegally into someone else’s home equity.

Earlier this week, FBI officials marched two executives with Bear Stearns past a throng of reporters. The two were arrested as part of “Operation Malicious Mortgage.”

While it’s great that the Justice Department is targeting mortgage scammers, there are still a group of businesses and individuals who have escaped any punishment: the banks and lenders who passed out mortgage loans to borrowers who clearly did not deserve them. Banks and lenders gave out way too many loans during the housing boom to people with high debt, low income and questionable employment histories. It is these loans — not the scams — that are the real cause of the mortgage crisis.