Feds focus on Florida mortgage fraud
Wake up and good morning. Pressured to scrutinize possible mortgage fraud by financial companies, federal prosecutors and investigators have opened 151 criminal cases nationwide between last October and this past July. Of those 151 cases, 69 are concentrated in southern Florida and another four are in central Florida including the Tampa Bay area. So says a new study of government data just released by researchers at the Transactional Records Access Clearinghouse at Syracuse University. The study is based on fresh data obtained from the Justice Department, which has a new program to track criminal mortgage fraud by lenders and financial companies, according to a New York Times report. Here's one insight from the TRAC study:
"Given the broad troubles now confronting the economy of the United States, and the role that mortgage fraud may have played in these problems, the relatively small number of cases in this area is somewhat surprising. For example, during the same period U.S. attorney offices criminally prosecuted 554 individuals for simple drug possession, 399 cases for environmental wildlife protection and 405 for child pornography."
So let's get this straight. Investigations into mortgage fraud in Florida make up 48 percent of all investigations in the past year into such fraud by the Justice Department. And of those 73 investigation in Florida, 95 percent of those are focused on South Florida. Now there's a dubious distinction award. Federal prosecutors are focusing their efforts and opened criminal cases in only 10 of the 89 judicial districts across the 50 states which -- in addition to Florida -- include California, Georgia, Mississippi, New York, Ohio, Pennsylvania and Vermont, according to the TRAC study. Only a fraction of the cases now being prosecuted have been completed -- none of the four around here are finished -- resulting in convictions or settlements, but the actual number is likely to be higher because of delays by courts in reporting outcomes.
Want to be amused by some good editorial cartoons about the financial bailout and the U.S. economic scene? Check out Jeff Sheridan, cartoonist for the University of South Florida Oracle student newspaper. Jeff's a USF junior majoring in studio art and minoring in political science. Here's some of his most recent work.
Good overview of the still precarious housing market in this country can be found in this front page New York Times story out today. What especially catches my eye is this "sniff test" for housing values — the ratio of home prices to rents — that indicates prices in many cities are still too high relative to historical norms. One example:
"In Miami, for instance, home prices are about 22 times annual rents, according to analysis by Moody’s Economy.com. The average figure for the last 20 years is just 15 times annual rents. The difference between those two numbers suggests that a home valued at $500,000 today might be worth only $341,000 based on the long-term relationship between prices and rents."
Who's John Stumpf? We'll be hearing more of his name now as the CEO of Wells Fargo. Stumpf was in Charlotte, N.C., Wednesday leading what a Charlotte Observer story called a "veritable pep rally" for headquarters employees of Wells' new acquisition: Wachovia Corp. As expected, he smiled and joked a lot but said little of substance. Except perhaps this reference, when questions were raised about Wachovia's ongoing philanthropy:
"We have never seen a bank do well over time where a community does poorly," he said, speaking from a stage decorated with balloons of blue and green on one side -- Wachovia colors -- and red and yellow on the other -- the colors of Wells Fargo.
The story ends on a grimmer note, quoting bank analyst Nancy Bush of NAB Research about the challenge of integrating the two big companies: It "will be a long and tough slog" that will involve "several years of pretty ugly results." Check out the news video of comments made by (lame duck) Wachovia CEO Bob Steele and Wells Fargo's Stumpf.
-- Robert Trigaux, Times Business Columnist