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Pablo Martinez Monsivais/AP
Treasury Secretary Henry Paulson

Hundreds of Fraudulent Mortgage Lenders Indicted

June 20, 2008 09:02 AM
by Isabel Cowles
Over 400 fraudulent mortgage lenders have been indicted since crackdowns began in March.

30-Second Summary

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Since the housing crisis began to seriously affect the U.S. economy, mortgage lenders have come under increased scrutiny for fraud, which has cost American homeowners an estimated total of $1 billion.

In March, U.S. Secretary of Treasury Henry Paulson announced that stronger regulation was necessary to control mortgage lenders. He suggested that financial institutions at large continue lending to facilitate economic growth, but that strong nationwide licensing standards for mortgage brokers be issued to curb corruption.

In April, the Federal Reserve announced that standards for mortgage lenders needed to change, requiring lenders “to show that potential borrowers can comfortably afford their mortgages, refrain from some types of deceptive advertising and point out the hidden fees in interest payments.”

More recently, arrests across the country have illustrated the increased malfeasance of some lenders. In Chicago, police reported that some were allied with street gangs.

Headline Link: ‘Hundreds indicted in mortgage fraud probe’

Background: Authorities take tougher stance on mortgage lenders

Related Topic: Mortgage fraud, virtually real

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