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Billions More in Mortgage Penalties Coming: Federal Regulator

Updated from 2:46 p.m. to include additional details in third and fourth paragraphs.

NEW YORK ( TheStreet) -- A working group of federal and state authorities responsible for extracting a $13 billion settlement from JPMorgan Chase late last year over abuses tied to mortgage bonds still has "more than a dozen ongoing investigations," which will lead to billions of dollars in additional costs to financial companies, according to Michael P. Stephens, Acting Inspector General of the Federal Housing Finance Authority.

Mortgage-related investigations stemming from the financial crisis are "in the fifth inning," Stephens said Wednesday at a Mortgage Bankers Association conference in New York.

Stephens expressed some surprise about complaints in the press that there have not been convictions of executives tied to the mortgage crisis. Between the 10 years he spent as inspector general of the U.S. Department of Housing and Urban Development and his current tenure at FHFA, "hundreds and hundreds of people have been indicted and convicted of some form of mortgage fraud," he said.

"In the last six months my organization has indicted 82 people," he said. "Three of those people committed suicide recently. Why do I bring that up? Most of the people that we deal with are not hardened criminals. They're white collar. They're highly educated. They belong to churches. They have no prior arrest records. They're pillars of society. They're all making tremendous amounts of money and when they do get caught it's a little bit more difficult for them to take it than a street criminal."

Stephens' office is part of a residential mortgage backed securities (RMBS) working group announced by President Obama in his 2012 State of the Union Address.  Though Obama announced the group would be led by New York State Attorney General Eric Schneiderman, the group "is housed in my office," Stephens said Wednesday.

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"Since its organization, we've been a very active member of the working group. Our activities have included providing expertise and assistance to members of the working group on investigative strategies, litigation and securitization matters [and] providing law enforcement agents and investigative attorneys to assist with investigations," Stephens said.

The deal with JPMorgan last year covered all civil claims by government authorities related to residential mortgage-backed securities (RMBS) sales by JPMorgan, Bear Stearns and Washington Mutual before 2009.

Separate from the working group, Fannie Mae and Freddie Mac have recovered some $20 billion from banks tied to RMBS that were supposed to be guaranteed by the government sponsored enterprises. The FHFA, Fannie and Freddie's regulator and conservator, forced the banks to buy back the loans since they were fraudulent or otherwise didn't live up to their original billing. Such deals include a $9.35 billion deal with Bank of America (BAC - Get Report) announced in March and a $5.1 billion deal with JPMorgan in October. 

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Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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