Maryland probes mortgage fraud

BALTIMORE | A statewide mortgage-fraud task force got under way Friday with a focus on Montgomery and Prince George’s counties and the Baltimore area, where Maryland’s highest concentrations of mortgage-related crimes occur.

Montgomery County State’s Attorney John McCarthy said mortgage fraud often transcends geographic boundaries, as con artists change locations when discovered and regularly change their schemes.

“We’ve seen these mortgage-fraud cases increase exponentially,” said Raymond Smith, assistant inspector-in-charge for the Washington Division of the Postal Inspection Service, in comments Friday.

Montgomery and Prince George’s counties lead the state in foreclosure rates.

The 17 law enforcement agencies from the Mid-Atlantic region that make up the Mortgage Fraud Task Force met Friday morning for the first time to prepare for the crisis roiling the market today and expected to continue into 2010.

“We want to be a step ahead on identifying the weaknesses in the regulatory structure,” U.S. Attorney for Maryland Rod J. Rosenstein said, noting the newly formed task force investigates both fraudulent mom-and-pop organizations and deceptive professionals with state licenses.

“One person can cause millions of dollars in losses,” he said after identifying two scams totaling $51 million and a recent scheme in Maryland where proceeds from mortgage fraud paid for an $800,000 wedding.

The task force is attacking a spectrum of fraudulent acts, from phony home appraisals and loan documents to dubious foreclosure-prevention specialists who prey on those who’ve lost the equity in their home and need to rebuild credit.

The task force has created a database of civil and criminal fraud cases, prioritized by the number and costs of frauds, to pursue restitution and deter the growing instances of deceptions.

The 17 different agencies - including prosecutors from Baltimore, Montgomery and Prince George’s County and the FBI, IRS, Postal Inspection Service and Secret Service - will share more resources to fight mortgage fraud. These agencies recently dedicated staff to mortgage fraud cases; the FBI said 25 percent of Baltimore’s agents now investigate mortgage fraud, a reallocation of resources since the counterterrorism focus after Sept. 11.

“We’re not telling people to rest easy with licensed professionals,” said Mr. Rosenstein. “We’re telling people you shouldn’t. You ought to seek independent advice.”