US launches legal action against Wells Fargo in mortgage fraud

Federal officials in the US have instituted numerous legal cases against the financial industry, for the collapse of the housing market and the subsequent attempts take advantage of desperate homeowners left in its wake.

The US attorney's office in Manhattan accused Wells Fargo of defrauding a government-backed mortgage insurance programme of hundreds of millions of dollars over more than a decade by improper underwriting of over 100,000 home loans.

At the same time, attorney general Eric Holder and other officials announced the results of a year-long effort to attack mortgage assistance scams. The Distressed Homeowner Initiative resulted in framing of criminal charges against 530 people accused of defrauding about 73,000 homeowners nationwide of an aggregate $1 billion.

The initiative also resulted in 110 federal civil cases against over 150 defendants who allegedly cheated an  additional 15,000 victims out of $37 million through phoney mortgage-assistance schemes.

"Put simply, these comprehensive efforts represent an historic, government-wide commitment to eradicating mortgage fraud and related offenses around the country," Holder said yesterday at a news conference.

In response to a question, Holder said the announcements were not timed to give a boost to president Obama's reelection effort. Obama had said that his administration would hold accountable those whose actions precipitated the Great Recession and those who took advantage of the victims.