The financial losses to homeowners and others who fell victim to the mortgage schemes are estimated to have cost some $1 billion, according to the FBI.
"Mortgage fraud and related securities fraud pose a significant threat to our economy, to the stability of our nation's housing market and to the peace of mind to millions of Americans," Deputy Attorney General Mark Filip said in a statement Thursday, according to the Associated Press.
Dubbed "Operation Malicious Mortgage," more than 406 people have been arrested since March 1, with 60 people arrested on Wednesday alone.
Officials identified 10 "mortgage fraud hotspots" in California, Colorado,
Texas, Minnesota,
Michigan, Illinois,
Ohio, New York,
Georgia and Florida, the AP reported.
Those named in the cases include housing developers, mortgage lenders and
brokers, lawyers, real estate agents and appraisers, said Sharon Ormsby,
section chief in charge of financial crimes for the Federal Bureau of Investigation.
The FBI announced that it is aggressively investigating corporate
fraud related to mortgage lending.
"I'm content to say (they're) generally
rather large corporations," Director Robert Mueller said Thursday at a
news conference, according to Reuters. The agency previously had said its probe
of potential fraud in the home mortgage industry encompassed 19 companies. It
has not identified them.
In a separate investigation, two former hedge fund managers at Bear Stearns were indicted in New York on Thursday, the first executives to face criminal charges in the collapse of the subprime mortgage market.
The collapse of the mortgage industry has reverberated nationwide, with arrests being made in Chicago, Miami, and Houston. Overall, banks have reported nearly 53,000 cases of suspected mortgage fraud last year alone, up from 37,000 a year earlier and around 10 times the level of reports in 2001 and 2002, according to the Treasury Department's Financial Crimes Enforcement Network.
Meanwhile, Treasury Secretary Henry Paulson called on Thursday for the government to give the Federal Reserve more powers to regulate Wall Street and other financial sectors.
On the overall economy, Paulson said the nation was facing a "trio of headwinds -- a housing correction, capital markets turmoil and high energy and commodity prices."
"We should quickly consider how to most appropriately give the Fed the authority to access necessary information from highly complex financial institutions and the responsibility to intervene to protect the system so that they can carry out the role our nation has come to expect -- stabilizing the overall system when it is threatened," Paulson planned to say to a women's business group in Washington, according to excerpts the speech released to news services.
In late March, Paulson unveiled a blueprint that proposed the most sweeping overhaul of the nation's financial regulatory system since the stock market crash of 1929 and the ensuing Great Depression.
