Over a dozen additional defendants were arrested on the U.S. mainland and the Dominican Republic, while the 300 or so remaining subjects in Puerto Rico began to turn themselves in—at the rate of about 70 a day.

What were they accused of? Submitting bogus accidental injury claim forms to a large U.S. insurance company and receiving payment in return. Among those indicted was the doctor who fraudulently signed all the forms.

The January 2011 arrests were actually the second phase of Operation Bad Medicine. In December 2009, 103 individuals, including two other doctors, were indicted for the same criminal activity that resulted in the insurance company paying out more than $800,000. All 103 were convicted.

How the case began. Several years ago, internal auditors from the victim insurance company, which was headquartered in Atlanta, contacted our FBI office there with suspicions that certain doctors working in Puerto Rico were facilitating a scam against the company.

After our initial investigative work and the first round of indictments, we were able to identify more than 500 others involved in the same accidental injury scam against the same company. According to the January 2011 indictment, from 2004 to 2008, a doctor from Lares, Puerto Rico falsely completed and signed some of the accidental injury claim forms for policy holders and their dependants—and he pocketed approximately $450,000 for doing it.

How the scheme worked. In general—after word got out that this particular doctor could be bought—policy holders would go to his office claiming every sort of accidental injury imaginable. The doctor, without even examining the patient, would fill out the claim form…for a fee of between $10 to $20 per form.

The policy holders would also make fraudulent claims of accidental injuries on behalf of their kids and other family members…injuries that were never properly verified by the doctor.

The scheme became so popular that some of the policy holders became intermediaries between the doctor and other policy holders. You didn’t even have to go to the doctor’s office—for a $20 fee, intermediaries would carry the necessary paperwork to and from the office for you.

Once the claim form was mailed, the insurance company would send the supposed “injured” party a check within about four weeks. Which is why most of the defendants didn’t just submit one claim…over time, some submitted hundreds of claims totaling thousands of dollars.

What’s surprising about this case is that the defendants aren’t, for the most part, hardened criminals—they are business professionals, blue collar workers, housewives, government workers, and even some law enforcement officers. But if convicted, they face up to 20 years in prison.

Special thanks to our partners in the Social Security Administration’s Office of Inspector General for their assistance during Operation Bad Medicine, and to members of the Puerto Rico Police Department for their work on our arrest teams last month.

Resource
- Press release

Many services have made a commitment to postpone foreclosure sales on mortgages that meet the minimum eligibility criteria for a Home Affordable Modification until those loans can be fully evaluated.

However for borrowers whose loans have been scheduled for foreclosure or any borrower that has missed one or more mortgage payments and has not yet spoken to their servicer should contact their servicer immediately.  Borrowers may also contact a HUD-approved housing counselor by calling 1-888-995-HOPE (4673).

1.  You are the owner occupant of a 1-4 unit home.

2.  The loan on your property is owned or securitized by Fannie Mae or Freddie Mac.

3.  At the time you apply you are current on your mortgage payments (current means that you haven’t been more than 30 days late in the last 12 months or , if you have had the loan for less than 12 months, you have never been late on a payment.

4.  You believe the amount you owe on the property is the same or slightly less than the value of your house.

5.  You have suffieient income to support the new payment and the refinance improves the long term affordability or stability of your loan.

Eligible borrowers who are current on their mortgages but have been unable to take advantage of today’s lower rates because their homes have decreased in value, may now have the opportunity to refinance.   Through the Home Affordable Refinance Program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they own or that they placed in mortgage backed securities.  Contact your current lender for more information.

For Interest Only Fixed and Arm Products the following types of loans are no longer permitted:

* 2-4 Unit Properties

*Cash Out Refinances

*Investment Properties

New Interest Only Eligibility Requirements:

*Maximum 70%/70% LTV/CLTV (Previously 80% for purchase and rate/term and was 75% for cash out).

*Minimum credit score 720 (previously 620).

*Reserves – 24 months using the fully amortizing PITI (was subjective)

Qualifying rate for 3 & 5 Year ARMS

Due to payment shock for ARM borrowers, a change is being made to the rate borrowers must be qualified.  The borrowers will be qualified at the greater of the note rate + 2%, or the fully indexed rate, based on a fully amortized Principal and Interest payment. Previously these loans were qualified at the Note Rate.