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    FBI: Mortgage fraud still prevalent, hard to catch

    By NEDRA PICKLER - Associated Press | AP – Fri, Aug 12, 2011

    WASHINGTON (AP) — Mortgage fraud remains widespread in the depressed housing market, with perpetrators motivated by high profits and little risk of getting caught, the FBI said Friday.

    The FBI's annual report on mortgage fraud said such schemes are particularly resilient and hard to discover, and their total cost is unknown. Real estate firm CoreLogic says more than $10 billion in loans were made with fraudulent application data in 2010, the report noted.

    Fraud last year stayed at levels seen in 2009 as the housing market remained in distress, providing ample opportunity for schemes, the report said. It predicted that perpetrators would "continue to seek new methods to circumvent loopholes and gaps in the mortgage lending market."

    "These methods will likely remain effective in the near term, as the housing market is anticipated to remain stagnant through 2011," the FBI said. The bureau's pending investigations into mortgage fraud increased 12 percent last year over 2009, officials said.

    The most prevalent schemes involve falsifying financial information to qualify buyers who otherwise would be ineligible for a loan. Other crimes involve inflated appraisals, including schemes that use dishonest appraisals to sell homes at elevated prices. Some get-rich-quick schemes persuade investors to buy rental property or land believing the price will appreciate quickly.

    The FBI says the crimes are committed by licensed and unlicensed brokers, loan officers, real estate agents, appraisers and other industry insiders who use their expertise to exploit vulnerabilities in the system. Organized crime groups are also behind some of the fraud, the report said.

    "Mortgage fraud enables perpetrators to earn high profits through illicit activity that poses a relative low risk for discovery," the report said.

    The top states for mortgage fraud last year were California, Florida, New York, Illinois, Nevada, Arizona, Michigan, Texas, Georgia, Maryland and New Jersey, the FBI reported.

    The agency says it is dedicating resources to combat the threat, including an initiative launched in June 2010 called Operation Stolen Dreams that targeted mortgage fraud throughout the country.

     

    3 comments

    • DavyCrockett
      DavyCrockett  •  9 mths ago
      The FBI is useless.
      • Michael
        Michael 9 mths ago
        The goverment is actually turning a blind eye to it because the housing market is in such dumps. Most livin home buyers are disgusted here in California, tired of the lies!
    • DM
      DM  •  9 mths ago
      An example of the mortgage frauds would be nice... Short sale fraud (how?), illegal flipping (what's involved?)... BTW, First!
      • Seoulgirl
        Seoulgirl 9 mths ago
        One example of short sale fraud is when a group of people low ball the short sale bid then turn around and have a private auction at a higher price. The low value on the short sale can keep housing pricing from recovering. With flipping, a person can buy a house at a low price then sell it to a prearranged borrower, someone in on the scheme, at an inflated price then share the cost of the sale. The person set up to buy the house usually lets it go without making a payment, or might make just a few payments before letting it go. These are just a few examples, there are a lot of evil geniuses out there willing to screw up the market for their own gain.
    • Michael
      Michael  •  9 mths ago
      There is massive fraud in real estate involving investors and realtors. The realtor doesnt always list the property correctly often leaving out detailed info that would inflate the price of the property higher. Instead they do not put the property out for all to see on the MLS until they have secured a lowball offer for there investor buddy. These people skirt the laws or often outright lie. A shortsale must take all offers. The realtor will tell livin buyers they are not taking anymore offers. The bank tired of waiting and getting limited information on the property reluctantly sells to the investor. The realtor gets there 5% sales proft, then both investor and realtor do minimal repairs and upgrades. Lastly, the investor and realtor then put the home back on the market, splitting the profit and realtor gets another 5% bonus! Shady scams...nothing has changed with these flippers since the housing scams....they also look for weak prey like divorces or elderly.
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