Mortgage Frauds Rise With Soft Economy

By:: Kara Johnson | June 18, 2010

Incidents of suspected mortgage fraud increased 5 percent during Fiscal Year 2009, according to the FBI, including emerging trends of perpetrators targeting foreclosed properties and government economic stimulus programs.

According to the FBI’s newly released 2009 Mortgage Fraud Report, more than 67,000 suspected incidents of mortgage fraud were reported to law enforcement in FY2009. FBI mortgage fraud investigations were up 71 percent from the previous year, with two-thirds of those investigations involving losses of $1 million or more.

An estimated $14 billion in fraudulent loans were originated in FY2009, according to figures from First American Core Logic provided by the FBI.

In conjunction with the report’s release, the FBI announced that a multi-agency sweep begun March 1 has involved 1,215 criminal defendants believed responsible for $2.3 billion in mortgage fraud losses and resulted in 485 arrests nationwide.

Unlike previous sweeps that focused solely on criminal cases, the FBI said the investigation has also addressed civil cases as well, bringing 191 enforcement actions that have resulted in the recovery of $141 million.

Mortgage fraud is an insidious crime that has devastating economic effects on families, communities and the nation,” said FBI Director Robert S. Mueller, III. “The FBI remains committed to working with our law enforcement, regulatory, and industry partners to unravel these complicated fraud schemes driven by greed and bring their perpetrators to justice.”

One of the emerging trends seen in FY2009 was frauds involving government economic stimulus programs. With the government putting billions into programs to stabilize the housing market and boost the economy, the FBI said perpetrators are seeking to tap a piece of the pie.

The FBI said a lack of transparency, accountability, oversight, and enforcement makes many of these programs susceptible to fraud and abuse, potentially leading to an increase in fraudulent activity and public corruption.

As in previous years, most mortgage frauds investigated were of the fraud-for-profit variety, where perpetrators seek to essentially steal from lenders or homeowners by gaming the system or other fraudulent means. The other type is fraud-for-property, where consumers mislead lenders in order to obtain loans they could not legitimately qualify for.

The top states for mortgage frauds in 2009 were California, Florida, Illinois, Michigan and Arizona, which were also been top-ranking states for foreclosures and declining property values.

Start here to compare mortgage rates from top lenders in our network

Call For Rates

800-419-1494

Speak to a lender now.

We will match calls to our toll free number with our network of lenders.

See Today's Rates

National Rates

Loan Type	Today	+/-
30 yr fixed	3.72
15 yr fixed	3.03
5/1 ARM	2.75

Rates may contain points

Compare Rates »

Browse Mortgage Rates

Featured Guides

Browse our comprehensive guides to popular topics related to mortgage and personal finance.

Mortgage Calculators

Mortgage Loan Directory and Information, LLC or Mortgageloan.com does not offer loans or mortgages. Mortgageloan.com is not a lender or a mortgage broker. Mortgageloan.com is a website that provides information about mortgages and loans and does not offer loans or mortgages directly or indirectly through representatives or agents. We do not engage in direct marketing by phone or email towards consumers. Contact our support if you are suspicious of any fraudulent activities or if you have any questions.

Mortgageloan.com is a news and information service providing editorial content and directory information in the field of mortgages and loans. Mortgageloan.com is not responsible for the accuracy of information or responsible for the accuracy of the rates, APR or loan information posted by brokers, lenders or advertisers.