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The FBI released its 2008 mortgage fraud report yesterday, and reports of suspicious activity across the country are up 36 percent compared to the previous year.

Some interesting bits from the bureau’s press release:

  • More than 60 percent of the FBI’s pending mortgage fraud investigations in the 2008 fiscal year had dollar losses of more than $1 million.
  • California is among the top 10 states for mortgage fraud.

I found this really interesting:

Criminals continued using old schemes, including property flipping, builder-bailouts, short sales, and foreclosure rescues. Additionally, in response to tighter lending practices, they facilitated new schemes, such as reverse mortgage fraud, credit enhancements, condo conversion, loan modifications and pump and pay.

Why did that stand out? Many law enforcement folks have said that in the current housing market, they are focusing much more on the foreclosure-rescue-scam side of things, partly because they believe that the banking system is not as loose as it once was to allow the old cash-back style of fraud to happen. But this report says the old schemes are still employed. (That was one big reason we dedicated so much time to our swindle story earlier this year — that these loans could get through for straw buyers in what was supposed to be a much tighter loan environment.)

The blogger at Calculated Risk pulled out these interesting paragraphs:

These combined factors uncovered and fueled a rampant mortgage fraud climate fraught with opportunistic participants desperate to maintain or increase their current standard of living. Industry employees sought to maintain the high standard of living they enjoyed during the boom years of the real estate market and overextended mortgage holders were often desperate to reduce or eliminate their bloated mortgage payments.

Mortgage fraud continues to be an escalating problem in the United States and a contributing factor to the billions of dollars in losses in the mortgage industry.

You can read the full report here.


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