BAP Blog FBI: Mortgage fraud still prevalent, hard to catch

The FBI reported Friday that mortgage fraud remains widespread in the depressed housing market, with perpetrators motivated by high profits and little risk of getting caught. In the FBI's annual report on mortgage fraud it said such schemes are particularly resilient and hard to discover and that their total cost is unknown. The Real estate firm CoreLogic feels that more than $10 billion in loans were made with fraudulent application data in 2010 the report also noted. Fraud last year stayed at levels seen in 2009 as the housing market remained in distress. This provided ample opportunity for schemes, the report said. It predicted that perpetrators would continue to seek new methods to circumvent loopholes and gaps in the mortgage lending market. The most prevalent schemes involve falsifying financial information to qualify buyers who otherwise would be ineligible for a loan. Other crimes involve inflated appraisals, including schemes that use dishonest appraisals to sell homes at elevated prices. Some get-rich-quick schemes persuade investors to buy rental property or land believing the price will appreciate quickly. The FBI says the crimes are committed by licensed and unlicensed brokers, loan officers, real estate agents, appraisers and other industry insiders who use their expertise to exploit vulnerabilities in the system. Organized crime groups are also behind some of the fraud the report said. The top states for mortgage fraud last year were California, Florida, New York, Illinois, Nevada, Arizona, Michigan, Texas, Georgia, Maryland and New Jersey, the FBI reported. The agency says it is dedicating resources to combat the threat, including an initiative launched in June 2010 called Operation Stolen Dreams that targeted mortgage fraud throughout the country.