Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Nye Lavalle
Inquiry's Focus Broadens
To Mortgage-Bond Insurers
January 14, 2008; Page A8
Authorities have broadened their probes into high-risk mortgages to include companies that provide insurance on bonds.

Connecticut Attorney General Richard Blumenthal said in an interview yesterday that his office is scrutinizing potential anticompetitive practices involving credit-rating firms, investment banks and bond insurers "not only in mortgage lending but in the valuation of other corporate debt." He said his office has subpoenaed bond insurers, but he declined to name them.

"There are a lot of issues that have been highlighted by the ongoing crisis in the debt and securities markets," he said. "It's like a cancer that has metastasized into different areas."

Mr. Blumenthal's office is also looking into the underwriting and packaging of loans by investment banks and credit-rating firms and has sent more than 30 subpoenas. He said his staff has reached "no conclusion" as to whether any laws were violated.

"One of the major areas that we're investigating concerns whether the investment banks fully and fairly disclosed relevant information relating to the risks of subprime or exception loans that were bundled into securities sold to investors," Mr. Blumenthal said. Exception loans are those that are looser than a company's lending standards. Mr. Blumenthal's inquiry into underwriting was reported Saturday in the New York Times.

Mr. Blumenthal said his office is cooperating with New York Attorney General Andrew Cuomo and the Securities and Exchange Commission, which are both investigating investment banks and credit-rating firms.

Mr. Cuomo's office has sent subpoenas to several Wall Street firms as well as to rating agencies, mortgage appraisers and consultants that provide due diligence on the loans. The SEC has more than three dozen investigations tied to the subprime area, including the role of investment banks.
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