US Attorney Hunting Down Mortgage Crooks, Ready to Indict

US Attorney Thomas O'Brien, Los Angeles' top federal prosecutor, is routing out mortgage fraud in the heart of the mortgage bubble. Orange County and metro-Los Angeles was home to three of the largest mortgage lenders and biggest implosions of the current mortgage crisis. All three are under investigation by O'Brien's office.

O'Brien told The Associated Press that, "I think we are going to see some fairly dramatic results in the near future. There are people who made many millions of dollars preying on unsuspecting people. That's wrong. That's fraud in a tremendous amount."

The Los Angeles office of the US attorney has an army of lawyers combing through the potentially dirty deals done by three major lenders: Countrywide Financial Corp.,IndyMac Bancorp Inc., and New Century Financial Corp. All three no longer operate as independent lending institutions. Countrywide was acquired by Bank of America,IndyMac was seized by the FDIC, and New Century filed Chapter 11 bankruptcy.

Early indications and reports seem to indicate a prosecution strategy to expedite indictments and plead out quick sentences avoiding long expensive judicial proceedings.

The US attorney is closely coordinating their investigations with the Securities and Exchange Commission. This is certain to bring maximum pressure and evidence to bear on unsavory targets of mortgage fraud.

Many close to the industry suspect multiple counts of mortgage application fraud and coordinated misconduct in loan originations. This cuts to the very core of the mortgage mess--borrowers unable to support their mortgages because of rampant overstated income and understated debt.

O'Brien is hinting at "dramatic results" from his investigations and indictment. However, industry insiders challenge that it will be very hard to prove that mortgage executive knew what was being fudge at very low levels within these mortgage factories.