FBI Sees Growing Evidence of Organized Mortgage Fraud

The latest statistics from the Federal Bureau of Investigation confirm that mortgage fraud is on the upswing.

"We can't find a chart that doesn't show up in a big way," special agent Bill Stern said at the Mortgage Fraud Conference here last week.

And even worse news, the FBI's mortgage fraud coordinator in Washington said, is that the trend is moving away from rogue individuals who pull off the scams and toward members of organized crime.

"Mortgage fraud is now a criminal enterprise that puts dollars in the hands of people who also are involved in such other crimes as drugs, murders and gangs," Mr. Stern told the conference, which was sponsored by SourceMedia.

As of early this month, the G-Man reported, the number of suspicious activity reports concerning mortgage fraud is up 62%, from 21,994 to 35,617. That, he said, "is a stark increase" compared to those alleging commercial loan fraud and false statements.

Also up is the number of pending cases, the number of charges and convictions and the amount of cases in which losses against financial institutions, the government and individuals exceed $1 million, Mr. Stern reported.

"We are now are prosecuting new cases at the rate of one a day," he told the conference. As of the first week of December, he also reported, 54% of the losses attributed to mortgage fraud were more than $1 million.

Noting that the FBI must focus on these larger cases because it doesn't have the resources to pursue every suspect, Mr. Stern called on the mortgage business to work hand-in-hand with law enforcement officials at the state and federal levels.

"We can't work these cases in a vacuum like we do drug cases, where lives are in danger and you don't need any special expertise," he told the meeting.

Encouraging lenders to participate in working groups and industry task forces "so we can leverage off your expertise," the FBI official said agents can't go to mortgage finance school for six months before they tackle a case of possible mortgage fraud.

"We don't have agents who work only mortgage finance cases as a career. They work a terrorist case, then a fraud case, then another kind of case, and they are all very different things. So we look to industry as a resource in helping us fight this growing crime." (c) 2007 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com http://www.sourcemedia.com