HUD Archives: News Releases

CUOMO COMMENDS SUCCESS OF HUD-DOJ INITIATIVE TO ELIMINATE WASTE, FRAUD AND ABUSE

U.S. Housing and Urban Development Secretary Andrew Cuomo commended the U.S. Department of Justice for bringing charges today against 40 real estate brokers, mortgage brokers, and mortgage lenders accused of involvement in the origination of an estimated $110 million in fraudulent FHA-insured home mortgages in Southern California.

U.S. Attorney Alejandro Majorcas announced the charges this morning in Los Angeles, following an investigation that was carried out with the assistance of HUD. FHA (the Federal Housing Administration) is part of HUD.

HUD assisted the FBI and the Department of Justice in the investigation by referring examples of possible wrongdoing, and by providing information that helped build the government's case.

"Today's announcement underscores the success of HUD's policy of zero tolerance of waste, fraud and abuse in any of our programs," Cuomo said. "We won't allow dishonest lenders and real estate brokers to defraud homebuyers and exploit FHA, and we will work with law enforcement agencies to stop this type of theft wherever we find it."

Cuomo said HUD will pursue administrative actions - including possible suspension or debarment from participation in HUD programs, or civil money penalties up to a maximum of $1.1 million per year - against individuals and businesses named in today's charges, along with their affiliated businesses.

FHA programs serve as the backbone for homeownership for one in eight Americans. FHA has insured 27 million mortgages since it began in 1935. Today 6.5 million mortgages - worth about $450 billion - are in the FHA portfolio. FHA insured 1.3 million mortgages last year with a combined value of more than $125 billion.

The FHA-insured mortgage program has brought homeownership within reach for many families with modest and average incomes. The program has helped increase homeownership opportunities because it reduces the risk for lenders, and thus makes financing easier to obtain for homebuyers.

"Today's action helps protect a program that is responsible for the highest homeownership rate in the history of the United States," said Art Agnos, Secretary Cuomo's Representative for Pacific/Hawaii. Agnos represented Cuomo at the Los Angeles announcement.

"For each of the past five years, we have seen a steady increase in the homeownership rate fueled in no small measure by the FHA insurance program," said Agnos. "It has put an emphasis on women and minorities who otherwise would not have had an opportunity to own their own home."

In 1997, Cuomo and U.S. Attorney General Janet Reno announced a joint "Get Tough" Initiative that cracks down on waste, fraud and abuse in HUD programs. Cuomo also appointed an FBI agent to head HUD's Enforcement Center, and brought in four Assistant U.S. Attorneys to provide legal services for the effort.

Content Archived: January 20, 2009