Wednesday July 8, 01:58 AM
US mortgage fraud soars in 2008, still growing: FBI
WASHINGTON (AFP) - Mortgage fraud cost the embattled US lending industry more than one billion dollars last year and is on track to cost it even more in 2009, a report by the FBI showed.
Suspicious activity reports filed by financial institutions in 2008 showed losses of more than 1.4 billion dollars, or a massive 83.4 percent more than in 2007, due to mortgage fraud.
"Losses reported in the first six months of fiscal year 2009 exceed the same period in fiscal year 2008 by 208 million dollars," the annual report on mortgage fraud showed.
Financial institutions (NASDAQ: FISI - news) reported 63,713 incidents of mortgage fraud in 2008, or more than a third over the previous year. The FBI predicts that the number of cases of mortgage fraud will exceed 70,000 this year.
Fraudsters were often industry-insiders including mortgage brokers, lenders, property appraisers, underwriters, accountants, real estate agents and others, according to the report.
They perpetrate the frauds because they are "relatively low-risk with high-yield returns," the annual report said.
"Despite increased scrutiny, many industry insiders will perpetrate fraud to maintain or increase their current standard of living," it said.
The ailing US economy is likely to force the fraudsters to look for new ways to scam people and the industry out of money.
"Industry personnel will feel pressure to find alternative methods to match the income they enjoyed during the real estate boom years," the report said.
The fraudsters could turn their attention to a new source of money: federal programs designed to stimulate the economy.
"Various programs implemented by Congress as a result of the Emergency Economic Stabilization Act (EESA) and the Housing and Economic Recovery Act (HERA (Milan: HER.MI - news) ) have the potential to provide new targets for mortgage fraud activity as perpetrators vie for billions of dollars provided by these programs," the report said.
In addition to traditional industry "conspirators", the FBI says organized criminal groups and gang members have become more involved in mortgage fraud activity.
To fight the still-growing scourge, the FBI at the end of last year created the National Mortgage Fraud Team (NMFT) and continues to work with the mortgage industry and law enforcement to try to curb the fraudsters.
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