MORTGAGE FRAUD
New Partnership
to Combat Problem
03/09/07
Equity
skimming. Property flipping. Straw buyers.
Inflated appraisals. These are some of the
fraud schemes criminals are using to take
advantage of a $2.37 trillion mortgage market
in the United States.
To
fight this growing scourge, we announced a
partnership on March 8 with the Mortgage Bankers
Association, which represents an industry
hit by fraud costs last year of between $946
million and $4.2 billion.
First,
some basics. There are two kinds mortgage
fraud: fraud for property and fraud for profit.
In general, fraud for property is when a home
buyer lies about income, debt, or other information
in order to buy a home. This type of fraud
accounts for about 20 percent of mortgage
fraud cases.
Then
there's fraud for profit. These crimes involve
industry insiders, and generally include multiple
loan transactions with several financial institutions.
There are numerous kinds of for-profit mortgage
fraud:
The
problem is growing: in September of 2002,
the FBI had 436 mortgage fraud investigations.
Currently, we have more than 1,036. That's
an increase of 237 percent in less than five
years.
And
of the 1,036 current cases, more than half
have expected losses of more than $1 million.
Of the victims, about 57 percent are federally
insured financial institutions; 8 percent
are government entities like the Department
of Housing and Urban Development; and 35 percent
are investors.
Here's
what we're doing about it. We're working
with the Mortgage Bankers Association by providing
their members with an advisory
for their customers outlining federal mortgage
fraud lawsand penalties. It comes with
an assurance that we will aggressively investigate
fraud claims.
"This
is clearly a crime problem in need of a real
answer. That answer is team work," says
Special Agent Karen Spangenberg, chief of
the Financial Crimes Section of the FBI's
Criminal Investigative Division. "The
newly developed Mortgage Fraud Warning enhances
our joint effort to combat this financial
crime problem by putting would-be wrong-doers
on notice, and potentially stopping the crime
before it is committed."
Read
the Mortgage
Fraud section of our 2006
Financial Crimes Report to the Public
for more details about mortgage fraud, including
more types of schemes, successful investigations,
and common indicators that a borrower may
be attempting to defraud a lender.
Resources:
Financial
Crimes
Common
Fraud Schemes
White-Collar
Crime