Mortgage Fraud

In a Wall Street Journal article 6-20-08, FBI Mortgage-Fraud Probe is Looking at Big Firms.  The following is a summary of the article.

‘Some 19 companies, including mortgage lenders, investment banks, hedgefunds, credit-rating companies and accounting firms, are being looked at.  Mortgage fraud is an area the FBI is aggressively pursuing.  The Justice Department and FBI officials announced 400 individuals have been criminally charged for their roles in home-lending schemes, with 60 arrested in one day.  Real estate developers, brokers, agents and appraisers were among those charged, along with lenders, lawyers and so-called straw buyers.  “Operation Malicious Mortgage” swept up criminal investigations from March 1 through mid-June, and produced 144 cases nationwide.  FBI officials estimated the losses from the alleged scams reached $1 billion.  Two former Bear Stearns & Co managers were also indicted from misleading investors about Bear hedge funds that ultimately collapsed, causing more than $1 billion of losses. 

Mortgage fraud cases are on the rise as the FBI cases lead to indictments.  in 2003 they had 436 cases, and in 2007 they have 1,200 cases.  There are another 1,400 investigations under way, and they will continue to prosecute and bring those individuals to justice including prison terms where appropriate.’

As a 29 year mortgage professional, I am tired of the fraudsters ruining the mortgage business.  I applaud the FBI and look forward to the clean up of our industry.  Fraudsters be ware – the FBI is watching!