Table of Contents
Mortgage Fraud 4
Mortgage Fraud Statistics 4
Reports of Fraud 5
Key players in a real estate & mortgage transaction 5-6
Factors for Mortgage Fraud 7
The Fraud Triangle 7
Common Mortgage Fraud Schemes 8
Who are victims of mortgage fraud? 9
How to avoid becoming a victim of Mortgage Fraud 10
How to report fraud 11
Mortgage Fraud Indictment 11-12
Since the housing market bust, there has been an explosion in the number of federal investigation of mortgage fraud scheme across the country. Mortgage Fraud is a violation of state and criminal statutes. Mortgage fraudsters include industry professionals and borrowers, they uses different schemes which are divided into two groups: Fraud for housing and fraud for profit. These will be discussed later. This paper explains the various types of mortgage fraud and the necessary steps needed to report if one has become victim of Mortgage Fraud.
According to the Federal Bureau of Investigation (FBI) mortgage fraud as a material misstatement, misrepresentation or omission relied on by an underwriter or lender to fund purchase or insecure a loan. In other words, it is a fraudulent practice used to obtain mortgage financing. It can be as simple as falsifying information to obtain the loan or to a more difficult scheme involving several parties with the intent of defrauding a financial institution and other parties of money through a mortgage loan.
Mortgage Fraud has continue to increase due to poor economic conditions, liberal underwriting standards and declining house values. The FBI has reported that for the fiscal year ending Sept 30, 2010 there were $3.2 billion in losses from mortgage fraud. That’s a 16 percent increase in dollar losses from 2009, and a 117 percent increase from 2008.
References: Federal Bureau of Investigation. (2011). Two Indicted, Arrested in $17 Million Mortgage Fraud Scheme Finney, Denise. (2010, April 21). Mortgage Fraud: Understanding and Avoiding It. Retrieve from http://www.investopedia.com/articles/mortgages-real-estate/10/how-mortgage-fraud-affects-markets Mortgage Fraud Overview. (May 2007). Retrieved from https://www.efanniemae.com/utility/legal/pdf/mtgfraudoverview.pdf Mortgage Fraud: How to Avoid Becoming a Victim. (2008, August 14). Retrieved from http://www.fbi.gov/news/stories/2008/august/mortgagefraud_081408 Perkins, Kevin L. (2009, December 9). Testimony. Retrieved from http://www.fbi.gov/news/testimony/mortgage-fraud-securities-fraud-and-the-financial-meltdown-prosecuting-those-responsible Potter, Stephanie. (2005, May 10). Appraiser makes deal in real estate investigation. Retrieved from http://www.herald-review.com/news/local/article_5eeeaa7c-f396-518c-82d3-c9decd206976.html Prietson, A and Dreyer, J. (2001) Mortgage Bankers Association of America. The impact of Fraudulent Loan Practices. U.S Financial Crimes Enforcement Network (FinCEN). (2010, December 14). Mortgage Loan Fraud Update