According to the FBI, mortgage fraud is still on the increase. The Federal Bureau of Investigations has had 23 regional mortgage fraud offices open since 2008 and have found that mortgage fraud is not just a problem from the housing bubble.
Could it be that the tighter requirements for loans combined with Federal tax incentives is driving the increase in fraudulent activity, or is it that we are now looking for it so the feds are finding more fraud.
Either way, the news is not great for the industry. And to top it off, reports are that there will be a major roundup of people involved in mortgage fraud this week. Last year when the report was released they arrested 400 people in “Operation Malicious Mortgage”.
As of June 2009, suspicious mortgage-related activity for the year was on track to exceed 70,000 cases, a 10 per cent increase over 2008 levels, according to preliminary FBI estimates. Mortgage fraud-related losses totalled $1.4bn in 2008, an 83.4 per cent rise over the previous year.
In the first six months of 2009, losses exceeded levels for the same period in 2008 by $208m. California and Florida, two states that played a key role in the subprime meltdown, had the most mortgage fraud in 2008, according to the latest data. Los Angeles, Miami, San Francisco, Chicago, Sacramento, New York, Tampa, Detroit, Minneapolis and Atlanta were the top cities in descending order for mortgage fraud. via the Financial Times (subscription required)
