FBI Issues 2008 Mortgage Fraud Report

From Press Release:

According to the Federal Bureau of Investigation’s 2008 Mortgage Fraud Report, released today, mortgage fraud Suspicious Activity Reports (SARs) referred to law enforcement increased 36 percent to 63,713 during fiscal year (FY) 2008, compared to 46,717 reports in FY 2007. While the total dollar loss attributed to mortgage fraud is unknown, financial institutions reported losses of at least $1.4 billion, an increase of 83.4 percent from FY 2007.

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Mortgage Fraud Defined

Mortgage fraud is a material misstatement, misrepresentation, or omissions relied upon by an underwriter or lender to fund, purchase, or insure a loan. Mortgage loan fraud is divided into two categories: fraud for property and fraud for profit. Fraud for property/housing entails misrepresentations by the applicant for the purpose of purchasing a property for a primary residence. This scheme usually involves a single loan. Although applicants may embellish income and conceal debt, their intent is to repay the loan. Fraud for profit, however, often involves multiple loans and elaborate schemes perpetrated to gain illicit proceeds from property sales. Gross misrepresentations concerning appraisals and loan documents are common in fraud for profit schemes and participants are frequently paid for their participation. Although there is no centralized reporting mechanism for mortgage fraud complaints or investigations, numerous regulatory, industry, and law enforcement agencies collaborate to share information used to assess the current fraud climate.

Source: FBI Financial Crimes Section, Finanical Institution Fraud Unit, Mortgage Fraud: A Guide for Investigators, 2003.