FBI: Mortgage Fraud 'Pervasive'

The Federal Bureau of Investigation says mortgage fraud is "pervasive and growing" and that the incidence of such fraud has nearly doubled in the past three years.The FBI reported that it investigated 818 mortgage fraud cases in fiscal year 2006 (up from 436 in fiscal 2003), resulting in 263 indictments, 204 convictions, and recoveries of $630 million in restitution and fines. Currently pending cases total 1,014. The FBI estimates that 80% of all reported fraud losses involve collaboration or collusion by industry insiders. "The increased reliance by both financial institutions and nonfinancial institution lenders on third-party brokers has created opportunities for organized fraud groups, particularly where mortgage industry professionals are involved," the FBI's annual financial crime report says. Meanwhile, the Mortgage Bankers Association and the FBI have announced a memorandum of agreement to work together to promote the FBI's Mortgage Fraud Warning Notice. The warning states that it is a federal crime for any person to make false statement regarding income, assets, debt, or matters of identification, or to willfully overvalue any land or property in an effort to influence the action of a financial institution. The MBA and the FBI said they will foster the use of the notice by making it available to mortgage lenders for posting on their websites.