Whitmer says AG Cox needs to answer questions about inaction on alleged mortgage fraud cases

LANSING — State Democrats are calling for greater accountability from Attorney General Mike Cox, whom they accuse of not acting on 15 cases of alleged criminal mortgage fraud forwarded from the state’s Office of Financial and Insurance Services since Jan. 1, 2008.

“It’s horrifying,” said state Sen. Gretchen Whitmer, an East Lansing Democrat who is likely going to run for attorney general in 2010. Last week, Cox officially declared his intention to run for governor. “One of the things I am going to do is call on the Judiciary Committee to call a hearing. I will formally request that of Chairman [Sen. Wayne] Kuipers,” Whitmer said, referring to the Holland Republican who chairs the panel.

Matt Frendewey, a Cox spokesman, has repeatedly refused to return calls for comment about what his boss, who is facing a crowded Republican gubernatorial race, has done to address the referrals from the Office of Financial and Insurance Services.

A Kuipers spokesman had no comment on what the senator was doing to address mortgage fraud in the state or how concerned he was about it, saying the lawmaker didn’t have enough information to comment. Kuipers is a likely candidate to replace U.S. Rep. Pete Hoekstra, the Holland Republican who is retiring from Congress to run for governor.

The issue came to light when Michigan Messenger published the story of the Harris family of Lansing, which had been facing a foreclosure on their property. Experts who were working with the case said the family had been the victims of mortgage fraud. Michigan Messenger reported that the company that had sold the Harris family their mortgage had been shut down by an order of the state, for, among other things, fraudulent practices. The company has since lost its licensing in other states as well.

The Harris family reached an agreement with their mortgage servicing company, but the underlying issue of mortgage fraud continues to be an issue many politicians say still needs to be better addressed. Recently, foreclosure prevention legislation was passed to help struggling homeowners, but the new law, which takes effect in July, does little to take aggressive action against mortgage fraud.

All of this comes to a head as Lansing Mayor Virgil Bernero, civil rights leader Jesse Jackson, Detroit Mayor David Bing, U.S. Sen. Debbie Stabenow and others host a rally at the Capitol on Monday at noon to “save the American dream.”

Bernero has said in interviews with Michigan Messenger that the dream of home ownership is under assault, and he cites the simmering foreclosure crisis in his own city as an example. He said Lansing faces as many as 10 foreclosures per week, and that until recently, he and other local officials let the issue of foreclosure slip off their political radar.

But no more.

The mayor has called for a two-year moratorium on foreclosures, endorsing legislation introduced by State Sen. Hansen Clarke, a Detroit Democrat, that would essentially call for a timeout on foreclosures. That legislation has not moved in the two legislative sessions it has been in play, and Senate Banking Committee Chairman Randy Richardville, a Monroe Republican, has said he won’t hold hearings on Clark’s proposal until he can be shown passing it won’t destroy the economy.