According to Attorney General Michael B. Mukasey there's no need for a federal task-force to unearth big-name mortgage fraud. That's what he told the New York Times last week, and instead said that investigations were best handled by local prosecutors.

This would seem to make great sense except that most mortgages are originated by lenders who are federally-regulated. For the most part state enforcement authorities have little if any jurisdiction over national lenders.

The federal government has vehemently defended its right to oversee national lenders and to exclude state officials. For instance:

• In 2004 the Office of the Comptroller of the Currency declared that "under the National Bank Act, the OCC has exclusive visitorial powers over national banks. In practice, this means that state officials are not authorized to inspect, examine or regulate national banks, except where another federal law authorizes them to do so."

• In the 2007 Watters decision, the Supreme Court ruled that state officials could not regulate mortgage banking subsidiaries.

• In 2008, New York State Attorney General Andrew Cuomo worked out an agreement with Fannie Mae and Freddie Mac and the Office of Federal Housing Enterprise Oversight, the government regulatory agency that oversees them, to protect appraisers against undue pressure from lenders. The arrangement was instantly opposed by the OCC because federal law exclusively "reserves to the 0CC the authority to regulate and supervise national banks' real estate lending activities."

Federal regulators did nothing while national lenders issued millions of toxic loans during the past five years and booked huge short-term profits. They now want state regulators to examine national banks, knowing full well the state regulators lack the authority to do so. Meanwhile, millions of mortgages are delinquent or in the process of foreclosure, the lending system is in turmoil and hundreds of billions of dollars have been lost on Wall Street.

Mr. Mukasey has a tremendous opportunity to determined what happened to our national mortgage system. No doubt millions of borrowers hope he will reconsider his position and launch a full-scale investigation regarding the toxic loans which now burden our country.

For more articles by Peter G. Miller, please press here.

Published: June 11, 2008

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Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .