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Calif. Creates Mortgage Fraud Task Force

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LOS ANGELES (AP) -- A new task force will investigate mortgage fraud in the wake of practices that crushed California’s housing industry and led to a wave of foreclosures, state Attorney General Kamala Harris said.

Harris was scheduled Monday to announce creation of the Mortgage Fraud Strike Force, a team of 17 lawyers and eight state Department of Justice special agents that will investigate unscrupulous lending.

“If the evidence leads us there, no case will be too big or too small to pursue,” Harris told the Los Angeles Times. “There remain millions of people affected by the mortgage crisis.”

The attorney general said the team will investigate everything from phony marketing to loan modification scams and wholesale corporate fraud.

The 2008 financial crisis was triggered by defaults on poor-quality loans that Wall Street financial institutions sold as bundled securities and promoted as safe investments.

Harris said her office plans to prosecute some cases involving sales of such securities to the state or its pension funds if the situations involved false claims.

The wave of foreclosures cost California homeowners up to $640 billion in equity, Harris said.

The task force is distinct from an ongoing investigation into foreclosure practices by the nation’s five largest mortgage servicers. The attorneys general of all 50 states are involved in that probe.

(Copyright 2011 by The Associated Press. All Rights Reserved.)

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