Politics

Holder’s mortgage fraud whopper

Holder's mortgage fraud whopper

Bloomberg News provides the latest evidence that the Obama Administration cannot be trusted to report on itself honestly:

The Justice Department made a long-overdue disclosure late Friday: Last year when U.S. Attorney General Eric Holder boasted about the successes that a high-profile task force racked up pursuing mortgage fraud, the numbers he trumpeted were grossly overstated.

We’re not talking small differences here. Originally the Justice Department said 530 people were charged criminally as part of a year-long initiative by the multi-agency Mortgage Fraud Working Group. It now says the actual figure was 107 — or 80 percent less. Holder originally said the defendants had victimized more than 73,000 American homeowners. That number was revised to 17,185, while estimates of homeowner losses associated with the frauds dropped to $95 million from $1 billion.

Wow, so Holder fudged his numbers by 80 to 1,000 percent!  That’s quite a “mistake.”  Why did it take so long for the Administration to discover and report on this amazing order-of-magnitude error?  Well, they didn’t.  The only came clean because they got caught lying:

The government restated the statistics because it got caught red-handed by a couple of nosy reporters. Last October, two days after Holder first publicized the numbers, Phil Mattingly and Tom Schoenberg of Bloomberg News broke the story that some of the cases included in the Justice Department’s tally occurred before the initiative began in October 2011. At least one was filed more than two years before President Barack Obama took office.

The author of the Bloomberg article, Jonathan Weil, goes on to recount his lengthy pursuit of the truth against stonewalling Justice Department representatives.  He wanted a list of the offenders in the mortgage fraud case, so he could investigate them himself.  He got a lot of “hang in there, any day now” responses, but the list never came.

And this isn’t the first time Holder’s Justice Department has pulled just this sort of scam to make itself look good:

In December 2010, Holder held a press conference to tout a supposed sweep by the president’s Financial Fraud Enforcement Task Force called “Operation Broken Trust.” (The mortgage-fraud program was part of the same task force.) As with the mortgage-fraud initiative, Broken Trust wasn’t actually a sweep. All the Justice Department did was lump together a bunch of small-fry, penny-ante fraud cases that had nothing to do with one another. Then it held a press gathering.

We’re left with the Obama Administration high-fiving itself for cracking down on financial crimes, without much actual cracking being done.  Weil thinks Attorney General Holder should apologize for the deception, but hopefully he’s not holding his breath waiting for the apology.  The rest of us can only chuckle and shake our heads, each time we hear another claim that the Administration has investigated itself, and pronounced itself clean of wrongdoing, or produced another load of dubious statistics proving that its programs are delivering great results.

Speaking of which, and on the subject of mortgages, it turns out that a quarter of the mortgages rescued and re-written by the HAMP program – portrayed as a radiant success – have gone into default again, leaving the Treasury Department at odds with Special Inspector General auditors.  Bloomberg News again:

The U.S. Treasury Department needs to do more to learn why more than a quarter of the borrowers in a federal mortgage workout program have re-defaulted, costing taxpayers at least $815 million, according to an audit report released today.

“You have, right now, a situation where Treasury does not understand and the servicers do not understand why homeowners are falling out” of the Home Affordable Mortgage Program, Christy Romero, the Special Inspector General for the Troubled Asset Relief Program, or SIGTARP, said in a telephone interview yesterday. “That has to change so that action can be taken to prevent that from happening.”

The report underscores a disagreement between the auditor and Treasury over the performance of HAMP, which has used TARP funds to pay lenders incentives to modify loans for nearly 1.2 million delinquent borrowers since February of 2009. More than 300,000 of those homeowners had re-defaulted by the end of April this year. SIGTARP also said it found an “alarming” number of HAMP re-defaults in an April audit.

Treasury officials said about 11 percent of borrowers who re-defaulted after receiving a HAMP modification lost their houses in foreclosure sales. The rest received other types of loan workouts or gave up their homes before foreclosure.

The worse default levels occurred among the first borrowers inducted into the HAMP program, reaching 46 percent for those who enrolled in 2009.  A large number of the homeowners claim this was due to mismanagement of the program by mortgage lenders.  “Homeowners said lenders had lost their modification records, miscalculated payments, failed to credit payments or had foreclosed on them while a modification was in effect — a violation of program rules,” Bloomberg reports.

This seems like the sort of thing you’d want to have very good data on, whether it’s a matter of HAMP being implemented poorly in the first two years, or structural flaws in the program’s assumptions about whether program beneficiaries will be willing or able to pay their restructured loans.  But good data on government programs is hard to come by these days.

Sign Up
DISQUS COMMENTS

FACEBOOK COMMENTS

Comment with Facebook