Real estate and mortgage fraud ran rampant during the 2000’s great housing bubble. We’ve all heard the stories but there have been few prosecutions, so it’s good to see some in progress.

David Crisp and Carl Cole were arrested by federal agents on mortgage fraud charges. They ran a prominent real estate brokerage in Bakersfield and apparently created straw buyers and manufactured false loan documents in order to sell homes and inflate housing prices.

Ten people, including Realtors, loan officers, and a notary, were arrested on 56 different indictments. It looks like these people will move from their private gated neighborhoods to a public gated high-density community of inmates.

Low interest rates and easy lending standards created an environment primed for mortgage fraud. It is good to see arrests that will likely result in jail time for the most prolific perpetrators. Unfortunately, this investigation took five years.

Rapidly rising home prices are not usually a good thing because they cause new buyers to pay high prices that are not supported by market fundamentals or their ability to pay back the debt.

Also check out the local news coverage of Crisp and Cole’s arrest at KGET.