California AG’s Mortgage Fraud Strike Force to Use State False Claims Act

In a speech delivered on Monday, May 24, 2011, California Attorney General Kamala Harris promised that her newly-formed Mortgage Fraud Strike Force would employ the state’s “robust” False Claims Act to hold those who commit mortgage fraud accountable.

“We are prepared to use it in a way that will look at all those who have made false statements or misled investors of any nature – be they individuals, institutions or municipalities,” Harris announced at a news conference held in Los Angeles.  She further stated that the Strike Force will “work to safeguard the homeowner at every step of the process – from origination of a loan to its securitization.”

Attorney General Harris’s announcement marks the beginning of a new frontier in False Claims Act litigation nationwide.  California has been hard-hit by the financial and housing crises, with foreclosure filings against 500,000 homes state-wide last year alone, and its employment of the state False Claims Act to combat mortgage fraud could prove to be a model in other jurisdictions with similar concerns.

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