'Fraud Losses in 2008 May Have Topped $25B'

Mortgage-related fraud may have cost the industry between $15 billion and $25 billion last year, according to an estimate made by the Mortgage Asset Research Institute. Speaking at a fraud prevention conference in Las Vegas, MARI's Merle Sharick told the audience, "Mortgage fraud is a giant and growing cause of losses." Speakers at the conference said fraud might be a bigger drain on the mortgage business than most executives realize. The last official FBI count put the industry's annual loss due to mortgage fraud at $5 billion. But Scott Broshears, the special agent in charge of uncovering and prosecuting the crime, said his agency is "probably easily investigating" crimes valued at double that amount. Lending further credence to the belief that much of the fraud for profit taking place is doing so at the hands of organized crime, James Freis, director of the Financial Crimes Enforcement Network, a division of the U.S. Treasury, said his agency has noticed a direct link between mortgage fraud and money laundering. "Mortgage fraud is a highly moving target that requires the disposition of large sums of cash," he said. "These are often interconnected. These are not separate things. Profits need to be integrated into the financial system." Scott Brower, the U.S. attorney for Nevada, told the conference that even with the change in administrations in Washington, mortgage fraud "will be on our radar screens for the foreseeable future." He said, "We're trying to get ahead of the problem, but I'm not sure anybody in law enforcement can. We're just scratching the surface. We're likely to be very, very busy for months and years to come."