UPDATED 12:59 PM EDT, July 19, 2012
The arrest of two New York City real-estate brokers in a $7.5 million mortgage fraud scheme prompted a leading U.S. attorney to comment that it was an example of what led to the housing bust.
"It is a microcosm of the kind of conduct that brought the housing industry to the brink of collapse," said Manhattan U.S. attorney Preet Bharara.
Mitchell Cohen and Erin Davis are charged with using third-party bidders to push the sale prices of houses arbitrarily high, then lying to the Department of Housing and Urban Development in order to secure government-backed loans to buy the properties and make a profit. Cohen is also charged with lying to a federal judge.
