Government may file subprime charges soon

Attorney: ‘Dramatic results’ coming in lender mortgage fraud investigation

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updated 8:47 p.m. ET Oct. 16, 2008

LOS ANGELES - The top federal prosecutor in Los Angeles indicated Thursday that charges are coming soon from a sweeping investigation of banks and subprime lenders for their role in the U.S. mortgage crisis.

"I think we are going to see some fairly dramatic results in the near future," U.S. Attorney Thomas O'Brien told The Associated Press. "Mortgage fraud is an extremely important issue to me and to the people of this district."

A grand jury is investigating at least three mortgage lenders — Countrywide Financial Corp., New Century Financial Corp. and IndyMac Bancorp Inc.

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Prosecutors are looking at whether mortgage fraud and other white-collar crimes were committed.

O'Brien has just finished his first year overseeing the Central District of California, seven counties that became the heart of the nation's real-estate boom and bust. The area is home to many lending firms, including some which lured homeowners into taking out exotic loans with cheap teaser rates that mushroomed after a set time.

Thirty-four lawyers currently are looking at mortgage fraud and other white-collar crimes, now one of O'Brien's top priorities.

The government is pursuing a "surgical approach" in its investigations and hopes to streamline its prosecutions by seeking indictments with only three or four counts, instead of spending several years seeking additional charges.

"We offer them three or four counts," O'Brien said. "We would get the same sentence and we plead them out and we move on to another crook."