Accountability for Mortgage Fraud Abuts Statute of Limitations

It’s been well-established that Washington’s effort to hold Wall Street accountable for the financial crimes that kicked off the housing crisis have been lackluster. But if they ever hope to turn that around, they will have to act soon.
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In some cases, the statute of limitations has already passed. In others, we are getting precariously close the deadline.

Miami foreclosure defense attorneys know that for securities fraud – as well as most other federal offenses – prosecutors have to file their cases within five years, or forever give up the right to pursue those claims.

The subprime lending bubble that gave way to the housing crisis peaked in 2007, though some crimes continued into 2009 and beyond.

The good news is there could be a number of ways to circumvent time.

One way is through a tolling agreement. In these situations, a firm or individual under investigation for mortgage fraud crimes could agree to have the statute of limitations extended, in exchange for a significantly more lenient penalty if ultimately found guilty. Of course, that assumes the investigation is at least underway prior to the deadline. When faced with the possibility of a tolling agreement or an immediate indictment, many people/firms choose the tolling agreement.

So far, though, we haven’t noted any high-profile instances. Also in order to work, a possible defendant would have to believe that the threat of an indictment was a real possibility. The government doesn’t have a good track record in this regard.

Another method that the government could pursue is to file charges that have longer statutes of limitations. For example, in cases of wire or mail fraud that affect a financial institution, the window of opportunity in which to file a lawsuit stretches to 10 years, rather than five.

Legal analysts believe that’s one of the best ways to do it, if the actions can fit the crime.

States’ attorneys general could also pursue their own legal action against these firms using individual state laws, which may have more relaxed statute of limitations standards and tougher penalties for mortgage fraud. While the scope of those cases might be significantly more limited than if federal authorities were to undertake such action, this has proven effective in some instances.

Take, for example, the founder and former president of DocX, once the country’s biggest foreclosure processing firms. Charges were brought against her in a state court in Missouri and a federal court in New York. It was one of the only criminal cases to have arisen out of the housing crisis, and she ultimately agreed to plead guilty in both courts. Specifically, her crimes included improper documents used to evict troubled borrowers from their homes. She was also accused of filing false documentation with county clerk offices throughout the country, resulting millions of instances of falsification. For this, she will serve a minimum of two years in prison.

Her alleged actions stretched into 2010.

Will any other major cases be brought? Some have noted “it doesn’t look good,” particularly in light of the new Government Accountability Office report indicating that the U.S. Justice Department has made mortgage fraud one of the lowest possible prosecutorial priorities.

If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Debt Warriors with Bruce Jacobs,” discussing foreclosure topics that matter to YOU.

Additional Resources:
Going after Wall Street – and watching the clock, Aug. 13, 2012, By James O’Toole, CNN Money
More Blog Entries:
Failure to Reduce Mortgage Debt Has Meant Slow Economic Recovery, May 22, 2014, Miami Foreclosure Lawyer Blog