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Arizona in line for big share of funds against mortgage fraud

Arizona is in line to receive $1.7 million of nearly $8 million the federal government is allocating to fight mortgage fraud nationwide, U.S. Attorney General Eric Holder said last week.

"I'm confident that these new investments will allow us to build on the recent success that we've seen across the country and the progress that's been made here in Arizona," Holder said at a news conference Thursday after meeting with state officials and business and community leaders.

"Let this be a lesson to those who would engage in mortgage fraud schemes," he said. "You will be found, you will be prosecuted and you will be punished."

Holder brought with him fellow members of the Obama administration's Financial Fraud Enforcement Task Force, which includes representatives from federal agencies, regulatory authorities and state and local law enforcement offices.

Arizona Attorney General Terry Goddard said he is grateful for the aid, noting that the state has been "besieged" by foreclosures, fraud and exploitation.

"At the Arizona Attorney General's Office, I've got to admit we're somewhat overwhelmed by the sheer numbers that we have confronted in this challenge," Goddard said. "And we're grateful for the task force and any help that comes forward in identifying these criminal activities, prosecuting them and hopefully sending a loud and clear message that this is not to be tolerated in this country."

According to the U.S. Department of Housing and Urban Development, Arizona leads the nation in its number of foreclosed homes that were funded by the Federal Housing Administration.

The Phoenix metropolitan area ranks fourth for reports of mortgage fraud, according to the Department of the Treasury's Financial Crimes Enforcement Network.

Those at the summit advocated for better enforcement against mortgage fraud, with Goddard linking much of the problem to people selling fraudulent mortgage modifications. The scams involve approaching people whose homes are in danger of foreclosure and charging them an up-front fee in return for a promise to reduce the homeowners' payments. Instead of providing help, the scammers take the money and run.

"We hear story after story after story about how phony those claims are," Goddard said. "These scam artists know exactly how much cash their victims have because they price their scheme to the amount of the mortgage payment. What they're doing is putting these families that much closer to losing their home."

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