According to a report released yesterday, U.S. mortgage fraud reports increased 36% last year. According to the FBI, suspicious activity reports increased to 63,713 during fiscal 2008 from 46,717 a year ago.
California and Florida had the highest number of suspicious reports, which some attribute to the fact that the housing market has dropped and credit has dried up in those regions.
According to the agency, reports filed through March put fraud reports on track to top 70,000 during the current fiscal year ... not a good sign.
It means that there are quite a few people out there still trying to live beyond their means, and there are several lenders who are more interested in getting the deal done than finding qualified people to lend to. This sure seems like the formula used to get us into this mess, and it sure suggests to me that some people haven't learned their lesson.
The FBI noted that the current factors in the housing market "uncovered and fueled a rampant mortgage fraud climate fraught with opportunistic participants desperate to maintain or increase their current standard of living." With industry employees looking to maintain a high standard of living and mortgage holders "desperate to reduce or eliminate their bloated mortgage payments" have led to the high number of fraud.
Is it possible to clean up this fraud? Judging from the fact that the industry didn't learn from the mistakes that got us into the current economic crisis, I'm guessing that it is going to take a major crackdown in order to get this situation cleaned up. Of course, the government hasn't seen fit to clean up this mess in the past, so why would it change now?
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Reader Comments (Page 1 of 1)
7-08-2009 @ 2:59PM
rg.bush said...
Having been the Managing Director of the only discount lender in the tri-state area we have assisted state & federal authorities on compliance & fraud issues and the overwhelming majority of the fraud is committed by the banker/broker to make money. Borrowers may at times be a party to such fraud but more often than not, it is the loan officer, or the company he works for, that is the offender. They make fake paystubs, sign docs illegally, overstate income (where stated is still available), and were in cahoots with the appraisers, until the banks were put in charge of ordering appraisals.
7-09-2009 @ 1:04AM
Cindy said...
Older FBI reports from the early 2000s warned that mortgage fraud during the housing bubble could take out the economy, and it reported as rg bush noted, that it was done mostly by insiders. (80% done by insiders) When you think about how these scams were perpetrated, there is no way consumers on their own could've pulled it off--it required the financial knowledge, the connections, training, access, etc, of insiders, and at best it required insiders going along with it. It's goofy to think consumers were even entirely duped, though many were...the fact is many were victims of outright fraud and didn't even know it. And many of the so called buyers were really flippers or con artists, but they all get lumped in together and some still think mere home buyers took out the economy.
I was glad to see that in the newest report the FBI described more of the builder perpetrated scams like down payment scams etc. Smaller companies tend to get in more trouble when they do it. Big ones pay fines or settle. Two of the big co's in the news for various types of fraud are Beazer and Countrywide. KB and other builders have been fined millions for predatory lending. I don't know if people don't want to believe it or what but they need to accept the fact that corporations are/were committing crimes and getting away with it in many cases, and we tax payers are being told we need to bail them out. It's obscene, many of these industry crooks should be headed to jail.