Mortgage Fraud Cases Surge, Convictions Rise, FBI Reports

May 23 2008 - The housing market slump translated into brisk business last year for mortgage scammers and the federal agents who pursue them, with the FBI winning 206 convictions, recovering nearly $22 million and still chasing a growing number of securities and commodities fraud cases.

According to an FBI report released yesterday, the 1,204 mortgage fraud cases pursued in fiscal year 2007, which ended Sept. 30, resulted in 321 indictments and court orders for $595.9 million in restitution.

In fiscal 2006, the agency followed 818 mortgage fraud cases, leading to 263 indictments, 204 convictions, court orders for $388.9 million in restitution and $1.4 million recovered.

The depressed housing market is an ideal climate for perpetrators of fraud, experts say. Identify theft, especially the targeting borrowers of with good credit, is prone to spike as are scams promoted as foreclosure rescues.

Common types of mortgage fraud are misrepresentation of income or assets, forged documents, misrepresentation of a borrowers’ intent to occupy a property and inflated appraisals.

The FBI, working with the Securities and Exchange Commission, is investigating more than 1,300 mortgage fraud cases and conducting 19 corporate investigations linked to the subprime lending crisis.

Mortgage Fraud Cases Surge, Convictions Rise, FBI Reports
by Marcy Gordon | Associated Press