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With the rise in foreclosures, the FBI is taking a more aggressive stand against mortgage fraud. The bureau has seen a tripling of cases since 2003, form 436 to over 1,200 in 2006, and the FBI is throwing more and more resources at the problem. But the reality is that these fraud cases are coming faster than law enforcement can cope with them and the crimes have long stopped being one off issues.

We have covered this situation in a myriad of ways, even to give mortgage fraud it’s own category. But until those committing the fraud decide the risk reward is not there anymore it will continue to be a blight on the real estate industry. The shakeout of the credit market has forced there to be a greater degree of accountability, but the industry should look to use this time to develop safeguards when credit eases and the shysters re-enter the marketplace.

The Federal Bureau of Investigation has stepped up probes into mortgage fraud with 1,200 cases under investigation compared with 436 in 2003 and 818 in 2006. The increased scrutiny stems in part from a flood of leads from banks: The FBI received more than 35,000 mortgage-fraud reports totaling almost $1 billion in losses last year, up from nearly 7,000 reports totaling $225 million in losses in 2003.
Federal prosecutors obtained 204 mortgage-fraud convictions last year, generating $388 million in restitutions and $231 million in fines. An FBI report in May said “mortgage fraud is pervasive and growing.” Many of the schemes have been around for some time but continue to crop up, despite increased awareness and scrutiny by lenders, regulators and borrowers. via RealEstateJournal

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