The FBI compiles data on mortgage fraud through Suspicious Activity Reports (SARs) filed by federally-insured financial institutions and the Department of Housing and Urban Development Office of Inspector General (HUD-OIG) reports. The FBI also receives complaints from the mortgage industry at large.
The FBI investigates mortgage fraud in two distinct areas: Fraud for Profit and Fraud for Housing.
1. Fraud for Profit by Lender
Sometimes referred to as "Industry Insider Fraud", the motive is to revolve equity, falsely inflate the value of the property, or issue loans based on fictitious properties. FBI publications on Mortgage Fraud indicate 80% of all reported fraud losses involve collaboration or collusion by industry insiders.
2. Fraud for Housing by Consumer
Represents illegal actions perpetrated solely by the borrower. The simple motive behind this fraud is to acquire and maintain ownership of a house under false pretenses. This type of fraud is typified by a borrower who makes misrepresentations regarding his income or employment history to qualify for a loan.
For Example, an article in the December 21, 2007 Wall Street Journal tells the story of a New Yorker who gave a bank false documents which indicated that he and his wife earned more than $50,000 month as top officers of a marketing firm and submitted statements showing he had $3 million in assets. In reality, he was actually a phone technician earning $105,000 per year with only $35,000 in assets and his wife was a homemaker with no outside income. They bought a mansion for $1.8 and it recently sold out of foreclosure for $1.1 million. The scheme was exposed by neighbors who saw multi-million dollar homes sell for sky-high prices and then sit empty. People involved in this Atlanta ring are now facing criminal fraud charges.
The latest FBI mortgage fraud report–details of which were mentioned above–indicates a direct correlation between falsified mortgage applications and early payment defaults. The report cites a BasePoint Analytics study that shows 30 to 70 percent of defaults can be linked to misrepresented mortgage applications. In other words, if borrowers would not have lied and committed fraud, as many as 70 percent of them may not be facing foreclosure right now.
Zip Codes in the United States with more foreclosures than the 30310 Zipcode in Atlanta: 1
Mortgage Fraud cases reported by lenders to the Federal government in 2007: 47,717
Number of open Mortgage Fraud Cases in December 2007: 1,210
Rank of Georgia among top states for mortgage Fraud between 2000-2006: 1
2006 Losses Due to mortgage Fraud: 4.5 Billion
Mortgage Fraud is becoming one of the most indicted areas in white collar crime. Reports confirm that in 2006 there were 263 Federal indictments and 204 convictions. That number will only increase when the 2007 statistics become available. protect yourself from Mortgage fraud by not making material misrepresentations on loan applications and running an honest business.
If you act honestly, and still find yourself facing an indictment or accusation of Mortgage Fraud, please contact us immediately at 404-304-4545 so that we can begin to prepare your defense early in the process.