"There is a subset of your industry that is corrupt," Supervisory Special Agent Richard Jacobs of theFBI told members of the New York Association of Mortgage Brokers.
Addressing the recent NYAMB annual meeting in Melville, N.Y., SSA Jacobs said a whopping 80% of mortgage fraudcases involve brokers.
Jacobs, who is in charge of 13 special agents in the bureau's Long Island white-collar crime unit, noted that NewYork is one of the top 10 hot-spot states in the country for mortgage fraud, even though it has one of the lowestamounts of mortgages in foreclosure.
| Nationwide, mortgage fraud is booming. |
He didn't single out brokers as the sole agents of mortgage fraud, noting that half of cases involve straw buyers,20% crooked lenders, and 20% real estate attorneys.Nationwide, mortgage fraud is booming. The FBI has received 43,497 SARs (suspicious activity reports) through thefirst eight months of fiscal 2008. That's compared with 6,936 for fiscal 2003.
In New York state, the FBI has received 2,391 SARs in 2008, as opposed to 1,617 for fiscal 2007. Dollar amountsinvolved show a huge jump, from $27.62 million for 2006 to $74.23 million for 2008.
Open mortgage fraud cases nationwide currently are 1,416, compared with 436 for fiscal 2003. One-third of fraudscost financial institutions in excess of $1 million, he said.
Agent Jacobs underscored the success of Operation Malicious Mortgage, a joint effort between the FBI, the U.S.Postal Service, the Federal Deposit Insurance Corp., and other agencies, giving a tally of 287 arrests, 406 defendantscharged, 173 convictions, and 81 sentencings.
Assets seized during this operation include sports cars, a boat, and a helicopter.
The FBI has also started Mortgage Fraud Task Forces in 39 offices around the country, again with multiple agenciesworking together. And there is a Mortgage
| One emerging scam the FBI is seeing is short-sale fraud. |
Fraud Working Group, which includes the Department of Justice and U.S. attorneys' offices.One emerging scam the FBI is seeing is short-sale fraud, where a fraudster gets a $130,000 appraisal on a homereally worth just $100,000, and takes $30,000 in a home equity loan that is never repaid. Then he recruits a strawbuyer who gives $80,000 on a short sale. The fraudster then sells the home for $100,000, getting an extra $20,000.
Internet phishing for straw buyers is now openly done on eBay, he said, and gang members are now being recruitedto find straw buyers for a fee.
What can someone who is caught and convicted of mortgage fraud expect for their near-term future? Jacobs says sentencesare two years minimum, and average 2-10 years.
And, he reminded his audience, there is no parole for a federal crime, so fraudsters must serve at least 85% oftheir sentences.
