Business & Economy

California, Nevada announce joint mortgage, foreclosure fraud probe

File photo: A foreclosed home.
File photo: A foreclosed home.
Spencer Platt/Getty Images

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The attorneys general of California and Nevada are joining forces to investigate various fraud and impropriety around mortgages and foreclosures.

California Attorney General Kamala Harris and Nevada Attorney General Catherine Cortez Masto announced a joint investigation to assist homeowners who have been victim to misconduct or fraud in the mortgage industry.

California and Nevada share the unique foreclosure system known as "non-judicial foreclosure," in which a bank can foreclose on a borrower's home with zero involvement by the courts. The result? A unique opportunity for lenders looking to make a quick buck.

"The mortgage crisis is a man-made disaster that has taken a heavy toll on the country, but it saved its worst for California and Nevada," said Harris. She added that she looks forward to similar collaborations with other states.

Harris recently subpoenaed mortgage giants Fannie Mae and Freddie Mac in order to dive deeper into their lending practices. Meanwhile, Masto has indicted two Southern California title officers whose so-called "robo-signing" scheme to sign and file thousands of fraudulent foreclosure documents tore through Las Vegas between 2005 and 2008.

Both Harris and Masto say they will combine resources in this investigation as well as sharing strategies, information and evidence in each state's prosecutions.

Masto said that fraudulent mortgage and foreclosure practices "continue to devastate lives, homes, and the economy in Nevada and California." She said that the effort would help "hold fraud perpetrators accountable and ensure law-abiding homeowners receive justice."

In October 2011, Nevada and California were the top two states with housing units entering foreclosure, according to a press release from Harris. That month, one in every 243 California homes and one in every 180 Nevada properties entered foreclosure.

Attorney General Harris formed a Mortgage Fraud Strike Force in May that has already found a stream of cases to jump into-- including a Calabasas law firm that filed a fake multi-million dollar "mass joinder" suit and a Stockton real estate company that took thousands of dollars in loan modification fees.

In 2010, California had the largest number of foreclosure filings: 546,669. Nevada had the highest percentage, with 9.4 percent of homes entering foreclosure.

This story has been updated.