A multi-million dollar fraud ring [subscription required] exposed in Atlanta may end up explaining more of the foreclosures than anyone imagined. Today's Wall Street Journal details the how the fraud ring got $6.8 million in mortgages from Bear Stearns (NYSE: BSC).

The Journal story talks about a New Yorker who told the bank that he and his wife earned more than $50,000 month as top officers of a marketing firm and submitted statements showing he had $3 million in assets, according to the federal fraud indictment. In reality, he was actually a phone technician earning $105,000 per year with only $35,000 in assets and his wife was a homemaker with no outside income. They bought a mansion for $1.8 and it recently sold out of foreclosure for $1.1 million. The scheme was exposed by neighbors who saw multi-million dollar homes sell for sky-high prices and then sit empty. People involved in this Atlanta ring are facing criminal fraud charges.

The FBI told the Journal that the percentage of white-collar agents and analysts devoted to prosecuting mortgage fraud is 28%. That's four times the number working on those types of cases in 2003 when it was only 7%. Lenders must file Suspicious Activity Reports when they suspect fraud. The number of reports being filed is up by nearly 700% between 2000 and 2006. In 2003 there were 436 active mortgage fraud cases and in 2007 the case load is 1,210.

Continue reading Mortgage fraud driving foreclosure numbers higher

Mortgage fraud driving foreclosure numbers higher originally appeared on BloggingStocks on Fri, 21 Dec 2007 09:00:00 EST. Please see our terms for use of feeds.