Watchdog faults U.S. Justice Dept on mortgage fraud prosecutions

WASHINGTON, March 13 Thu Mar 13, 2014 10:42am EDT

WASHINGTON, March 13 (Reuters) - The U.S. Department of Justice did not make sure that mortgage fraud was prioritized throughout the agency, despite public statements about the importance of such cases, a watchdog at the agency said on Thursday.

The FBI also ranked mortgage fraud as its lowest criminal threat in its lowest crime category, the DOJ inspector general said.

The inspector general, Michael Horowitz, also said he found "significant deficiencies" in the Department of Justice's ability to accurately report its mortgage fraud efforts.

In recent years federal prosecutors have been accused of not doing enough to go after the kind of conduct that fueled the financial crisis, including mortgage fraud.

The FBI received $196 million in funding to investigate mortgage fraud activities between the 2009 and 2011 fiscal years, but in 2011 the number of agents investigating such cases and the number of open investigations decreased, the Office of the Inspector General said.

In response to a draft of the report, Deputy Attorney General James Cole said the Department of Justice would aim to improve mortgage-related data collection and reporting.

He also defended the agency's dedication to combating mortgage fraud. Cole, in a Feb. 21 letter to Horowitz, pointed to a spike in mortgage convictions from the 2009 to 2010 fiscal years, and said the Department of Justice had built up its mortgage fraud enforcement infrastructure in recent years.