A HomePath sign stands outside a foreclosed home for sale in Princeton, Illinois, U.S., on Wednesday, Jan. 22, 2014. Audit finds that the Justice Department ranks mortgage fraud low on its priority list, and wildly overstated its success in one case. (Daniel Acker/Bloomberg)

When it comes to cracking down on mortgage fraud, the Justice Department isn’t as tough as its repeated public statements suggest, and it even inflated its success in one highly publicized incident, the department’s internal watchdog said Thursday.

At the FBI, mortgage fraud was a low priority, ranking among the lowest of the criminal threats the bureau investigates, according to the department’s inspector general.

The number of FBI agents investigating this type of fraud and the cases they handled dropped in fiscal 2011 even though the bureau received $196 million between fiscal 2009 and 2011 to target mortgage-fraud activities, the audit said.

The department “did not uniformly ensure that mortgage fraud was prioritized at a level commensurate with DOJ’s public statements about the importance of pursuing financial frauds cases in general and mortgage fraud cases in particular,” the inspector general’s office said in a statement.

Mortgage fraud was thrust into the spotlight during the housing meltdown, but the nature of the schemes has evolved. When the housing market was hot, the most prevalent schemes involved people buying homes, sometimes by embellishing their income or hiding their debt, according to the audit. But the fraud has shifted to foreclosure-rescue scams, loan-modification schemes or other arrangements that victimize consumers.

The inspector general’s office accused the Justice Department of shoddy record-keeping, citing “significantly flawed information” that was released to the public regarding the Distressed Homeowners Initiative, a multi-agency effort led by Justice that aimed to snuff out mortgage fraud.

At an October 2012 news conference publicizing the initiative’s results, Justice wildly overstated the success of the effort, the audit said.

Attorney General Eric H. Holder Jr. claimed that the initiative led to 530 criminal defendants being charged, but only 107 were charged, the audit said. The total losses tied to the initiative’s federal civil cases were also far off the mark — $95 million instead of $1 billion.

Even though Justice officials were concerned about the accuracy of the numbers by November 2012, the department continued to publicly cite the statistics for another 10 months, according to the inspector general’s analysis.

Justice publicly acknowledged the errors in August.

Justice and the multi-agency group known as the Financial Fraud Enforcement Task Force also did not have a method for collecting or verifying the statistics they released to the public. “We found this process to be disturbing,” the audit said.

Justice officials told the auditors that the data released about a separate initiative called Operation Stolen Dreams also may be flawed.

On Thursday, the Justice Department said the inspector general’s analysis was flawed.

“The facts regarding the Department’s work on mortgage fraud tell a much different story than this report,” spokeswoman Ellen Canale said in a statement.

“In the time period in question, the number of mortgage fraud indictments nearly doubled, and the number of convictions rose by more than 100 percent. As the report itself notes, even at a time of constrained budget resources, the department has dedicated significant manpower and funding to combatting mortgage fraud,” Canale said.

In a written response attached to the audit, James M. Cole, the department’s deputy attorney general, said that the mistakes made in the Distressed Homeowners Initiative should not detract from the department’s successes from fiscal 2009 through 2011, the period examined by the inspector general’s office.

Cole went on to cite some of the department’s successes during that time, including a $25 billion agreement that the department and 49 state attorneys general reached with the nation’s five largest mortgage servicers in 2012. The deal was the largest federal-state civil settlement ever reached, Cole said.