There are thousands of documented cases of actual fraud, which were not pursued - almost as if the AGs don't want justice. They investigate practically nothing, and when the truth comes out (accidentally or by way of a whistleblower), they move quickly to close it with a slap on the wrist which is usually amounts to a fine far below the damage to 3rd parties.

Almost everything about the mortgage business is a fraud from one perspective: MERS. I don't have time to find the terse summary, but http://market-ticker.org/akcs-www?post=188061 should give you some idea about what the problem is.

The basic problem: without actually recording a transfer at the county registry, a mortgage cannot be given the preferential security treatment. Almost none of the mortgages sold had their title transfer registered -- this would need to be done every time the mortgage changed hands, and incurs a non trivial cost. Instead, the banks made their own law, created a corporation called MERS, which supposedly owns everything, and acts as an agent of the MERS-registered owner. However, this is not legal - not for foreclosing, not for the IRS, not for the counties.

Congress' way to fix it is to make it retroactively ok for the banks to make their own law. I'm not following closely, so I'm not sure if that has indeed happened - but I am sure that the whole MERS thing is illegal, and that AGs (except perhaps in Louisiana) try to fix it by ignoring it.