TIME

Justice’s Lousy Mortgage Fraud Numbers

Attorney General Holder And HUD Secretary Donovan Discuss The Distressed Homeowner Initative
Attorney General Eric Holder speaks about distressed homeowners during a news conference at the Justice Department, on Oct. 9, 2012 in Washington, DC. Mark Wilson—Getty Images

The Justice Department touted wildly inflated anti-mortgage fraud numbers from the financial crisis and overstated its commitment to combating mortgage fraud, an inspector general report finds

On Oct. 12, 2012, Attorney General Eric Holder held a press conference to highlight the results of the Distressed Homeowner Initiative of his Financial Fraud Enforcement Task Force.

The numbers were impressive. Holder said that the initiative had resulted in 530 criminal defendants being charged, including 172 executives, which in turn had resulted in 285 criminal indictments or informations being filed in federal courts in the previous year. Total losses for the 73,000 affected homeowners: $1 billion.

They were also completely wrong. According to a DOJ Inspector General audit [pdf] of the department’s mortgage fraud efforts, released Thursday, Justice officials immediately started back-pedaling on the numbers when contacted by the IG’s office after the press conference. Some of the cases cited had nothing to do with distressed homeowner-related fraud. Others came well before the previous year.

It took DOJ until August 9, 2013 to finally figure out what the real numbers were. According to the IG report:

The number of criminal defendants charged as part of the initiative was 107, not 530 as originally reported; and the total estimated losses associated with true Distressed Homeowners cases were $95 million, 91 percent less than the $1 billion reported at the October 2012 press conference.

The IG’s office found no evidence of a political motive–it traced the bad numbers to the FBI. Instead, the IG found a systemic failure to accurately track mortgage fraud numbers at the FBI, the fraud task force and at the Justice department generally.

In a statement released Thursday, Republican Senator Chuck Grassley accused the department of “cooking the numbers about the cases it pursued” and said the bad numbers look “like an attempt by the Justice Department to pull the wool over the public’s eyes.”

The Justice department leadership accepted the recommendations of the IG aimed at fixing the bad mortgage data collection and reporting. But the department disputed separate conclusions the IG drew about the department’s commitment to fighting mortgage fraud, which the IG said was not “prioritized at a level commensurate with its public statements.”

Said Justice spokesperson Ellen Canale in a statement released Thursday, “Even in a time of constrained budget resources, the department has dedicated significant manpower and funding to combating mortgage fraud.”

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