June 18, 2010
The Honorable Kenneth M. Donohue HUD Inspector General Department of Justice Operation Stolen Dreams
Yesterday, I stood in this room to announce with others the indictment of the head of the TBW Corporation, who “cooked the books” and caused the largest loss in the history of HUD’s FHA and Ginnie Mae programs.
As I said then, the last few years have seen intense developments in the housing markets with the Government stepping in to support unstable marketplaces and devastated communities. HUD, through its programs, has been a linchpin to aiding those devastated by the collapse of the subprime markets.
We in the HUD Office of Inspector General view our vital responsibility with even more conviction. The FHA portfolio has almost doubled in two years to over $800 billion. FHA now has a 70 percent market share in terms of home sales and refinances. Likewise, the Ginnie Mae program has doubled in a short period to an over $880 billion balance.
Stabilizing and improving the housing market is critical to the nation’s economic recovery. Clearly, any fraud perpetrated against HUD has a significant impact on that fragile recovery. With changing market conditions, we find new schemes emerging and those with intent on causing harm finding new opportunities. Cooperation is critical to combating this constantly evolving problem.
I am here to talk about the enormous efforts that the HUD OIG and our partners on the stage today have undertaken on behalf of the Financial Fraud Enforcement Task Force to confront this escalating problem.
Today’s activities are the culmination of months of efforts all across the nation. The HUD OIG has investigated hundreds of subjects regarding fraudulent activity. Many more are in the works.
In one specific case, the HUD OIG, working closely with the FHA, investigated a company in South Florida that originated FHA loans for condo developments. It was revealed that a host of documents were fabricated which resulted in the submission of fraudulent data involving millions of dollars of loans.
It is not just HUD that suffers any losses and these are not just some abstract numbers relating to some abstract corporations. Real damage is done by those who commit mortgage fraud. It is the profound impact on our families, our neighbors, our communities and our nation -- just like the condos that were eventually condemned, and all the occupants forced out, in the mortgage company case I described earlier.
So today I am here to say for the Secretary of HUD and for myself – that we are deeply committed to ensuring that scarce resources are not diverted to those who would seek to enrich themselves at the expense of those who now so desperately need our assistance.