May 17 2008
Mortgage Fraud Update
Back in April of 2007, Inman News reported a 42% increase in suspected mortgage fraud rates nationwide over 2006. Well, the trend seems to be escalating, as the FBI warns in a report out recently. The Bureau warns that the pace seems to be quickening, given figures for the first half of fiscal year 2008. The figures include losses from the sub-prime mortgage fiasco.
Mortgage fraud includes inflating income or assets, forged documents, misrepresenting intention to occupy the property and exaggerated appraisals. The FBI report warns of increases in fraud, probably due in part to the depressed real estate market, opening the door for perpetrators of fraud. The FBI also warned of an increase in identity theft mainly targeting people with good credit ratings.
In March, ABC News reported on mortgage rescue scams, where con artists purport to help cash strapped home owners pay off their mortgages, only to abscond with the fee they charge, leaving the home owner more strapped than ever and facing foreclosure. The technology of today unfortunately adds to this because it allows easier access to personal information for identity thieves. When home owners submit information to get a home equity loan or line of credit, thieves steal the information and send the financial institution a fax, requesting them to transfer the funds elsewhere.
The FBI bases its gloomy predictions on an increase in fraud complaints, saying they “could be headed for 70,000″ suspicious activity reports. The higher rate of complaints enforces FBI director Robert Mueller’s warning that “as housing prices continue to fall, more financial misdeeds will no doubt come to light.”
The FBI is currently investigating over 1,300 cases of mortgage fraud and 19 investigations into subprime lending cases.