Federal law enforcement officers say that with heavy demands on them from homeland security, they have had the resources to shut down only the worst offenders.
"By the time we prosecute, the damage has been done, the neighborhoods are already destroyed and the money is gone," said David E. Nahmias, the U.S. attorney who oversaw the Hill case.
In Atlanta, entire neighborhoods and condominium developments, especially those in affluent areas, were hit by organized fraud rings. Initially, these schemes pumped up housing values for everyone as artificially high appraisals helped the swindlers get inflated loans. Legitimate home buyers rushed in to get a piece of what they thought was a soaring real estate market. Now as the fraud is being exposed, their home values are taking a hit.
As more of these cases come to light around the nation, the question is: How much did an epidemic of fraud contribute to the frenzied housing market of recent years?
Earlier in the article there was this:
In some neighborhoods, mortgage fraud became so extensive that it drove up overall home prices. That is what happened in Atlanta. Hill, 50, was convicted last month in what authorities call one of the biggest mortgage-fraud cases in U.S. history. It involved 400 fraudulent loan applications; nearly $100 million in mortgages; and 120 closing attorneys, appraisers, mortgage brokers and others who prosecutors say were in on the scam.
Federal prosecutors say this kind of fraud is hardly unique to Atlanta -- the lax lending standards that Hill exploited have existed throughout the country in recent years.
What's that saying? "One bad apple spoils the whole bunch."
There were a lot of innocent victims taken advantage of:
Prosecutors think most of the straw buyers, some just college students, did not know what Hill was doing with their names and credit histories. Several later testified that Hill's attorney flipped through loan documents so fast at closing that they hardly read what they were signing. Most apparently thought they were becoming the owners of homes Hill would maintain and rent out to make the monthly payments.
This shows that more attention needs to be taken of white-collar crime. As the article says, resources are being taxed due to the demands of Homeland Security.
I can also tell you that working in the bankruptcy field, there is a lot of overlap in dealing with people who are the most vulnerable to being taken advantage of by these types of crimes. That is why it is important for us to have a strong governmental arm to be the watchdog for these people. Think about it, the people who are the most educated about how these things work -- lawyers, appraisers, real estate agents and bankers -- were were the ones taking advantage of less-educated folk and were getting rich at their expense.
This is the reason why you need more government oversight to prevent white-collar crime. The effects of the crimes often have wide-ranging consequences.