Most cities across the nation are becoming all too familiar with foreclosures and vacancies. Most people only see a “For Sale” sign in the front yard overrun with uncut grass and weeds.
What most don’t see is the fraud committed that caused some of these homes to fall into foreclosure.
According to a report by the FBI, mortgage fraud is a costly liability for lenders across the nation – to the tune of over $1.4 billion last year. Even higher figures are anticipated for 2009. Mortgage fraud increased by more than 83.4 percent from 2007 to 2008. That’s just in one year.
The FBI’s annual mortgage fraud report showed that losses in the first half of the 2009 fiscal year exceeded fraud committed during the same period in the previous fiscal year by about $208 million. In 2008, lenders reported 63,713 separate incidents of mortgage fraud. That’s more than one-third more than the previous year. The FBI anticipates the number of cases for mortgage fraud to exceed 70,000 this year.
Due to the various hands that touch the mortgage, it’s often too easy to commit fraud and too difficult to identify suspect activity until it’s too late. Based on the report, industry insiders are often the perpetrators, including real estate agents or brokers, mortgage brokers, property appraisers, lenders, accountants, underwriters and others. The annual report stated that they are enticed by the “relatively low-risk with high-yield returns.”
The temptation is too much for some to bear, so they give in to it, even with the tighter reigns and scrutiny being placed on the mortgage industry today. Due to the down economy, it is likely that more will be lured into looking for new and creative methods to scam homeowners and the lending industry.
According to the report, those in the industry feel pressured to use other means to match income “they enjoyed during the real estate boom years.”
The next scam target? Federal economic stimulus programs have been predicted to be the next opportunities for mortgage fraudsters. As a result of the Housing and Economic Recovery Act (HERA) and the Emergency Economic Stabilization Act (EESA), various federal programs will potentially become new targets for mortgage fraud.
In addition to the predictable perpetrators, the FBI now sees organized crime and gangs becoming more involved in mortgage fraud.
In attempts to battle the mortgage fraud epidemic, the FBI initiated the National Mortgage Fraud Team (NMFT) and continues their efforts with law enforcement and the mortgage industry to catch and deter fraudsters.
A day late and a $ Trillion short?
A day late and a $ Trillion short?