By Aruna Viswanatha
WASHINGTON, March 13 The FBI ranked mortgage
fraud as its lowest criminal threat after the height of the
financial crisis, even though the U.S. Justice Department had
said that investigating mortgage fraud was to be a priority, a
report by a department watchdog said on Thursday.
In addition, although federal investigators received
significant additional funding from Congress to pursue mortgage
fraud cases, the FBI did not always use the funds only for
mortgage fraud, the report by the Department of Justice's
inspector general said. The FBI is part of the Justice
"The FBI in adding new staff did not always use these new
positions to exclusively investigate mortgage fraud," inspector
general Michael Horowitz said in the report.
The report also said that the FBI placed mortgage fraud in
its lowest criminal category.
In recent years the government has 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 inspector
In response to the report, Justice Department spokeswoman
Ellen Canale said the number of mortgage fraud indictments
nearly doubled and the number of convictions rose by more than
100 percent between 2009 and 2011, the two years the inspector
"As the report itself notes, even at a time of constrained
budget resources, the department has dedicated significant
manpower and funding to combating mortgage fraud," Canale said.
The inspector general also said he found "significant
deficiencies" in the Department of Justice's ability to
accurately report its mortgage fraud efforts.
The agency mistakenly inflated its results in mortgage fraud
prosecutions at an October 2012 press conference by some 90
percent, Horowitz said.
While the Justice Department said at the press conference it
had prosecuted crimes targeting homeowners that had resulted in
more than $1 billion in losses, it was not until 10 months later
that it updated the information to reflect the accurate number
of losses - only $91 million, Horowitz said.
When the information was updated, the number of such cases
also dramatically dropped, from 530 to 107. The Justice
Department has since corrected the statistics in the related
In the report, Horowitz also said he found mortgage fraud to
either be a low priority or not listed as a priority for
multiple FBI field offices that he visited, including in New
York, Miami, Los Angeles and Baltimore.
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.