FBI: L.A. leads in mortgage fraud

The FBI's annual mortgage fraud review says Los Angeles leads the nation in mortgage fraud, measured by reports from the agency's field offices.

The Los Angeles field office received 9,971 "suspicious activity reports" in 2008; second-place Miami had 5,155. The report says fraud schemes include builders offering secret incentives to home buyers, such as falsely inflating a purchase price to make it appear as if a buyer has made a down payment when none was made. If the home forecloses, there is no home equity for the lender to recover.

Other schemes the report identifies are scams in which a group uses a straw buyer to intentionally default on a mortgage, then buys the property at a discount from the lender through a short sale; and foreclosure rescue schemes in which perpetrators offer to help a borrower in foreclosure and surreptitiously take over the deed to the property.

The report is a broad, but not very deep, overview of the scope of mortgage fraud. The FBI acknowledges that its findings are drawn from multiple sources, including local police, other government agencies, private consultants and trade groups, and that there are inconsistencies in the ways the groups gather and report data.

-- Peter Y. Hong

Comments

[Laker]

Peter,
Can you provide us with a link where we can report such fraud activity?
Does the FBI website has something like that>?

[Peter Hong]

@Laker: www.fbi.gov has local field office contact info and a "submit a crime tip" function.

[Rich]

Given the nature of the reporting period it looks like we're getting a statistical snapshot of the crime spree that got us into the bubble rather than activity which is going on today. I can't really imagine most of these schemes getting off the ground in today's tight credit environment as most of the tools of the crime, such as third party mortgage brokers, lax bank loan officers, and crooked appraisers, are out of the business...

[fred]

Fraud? really, I cant imagine!

I think a shorter list would be those that were not fraud for the past 5 years.

[Nelcisco]

Rich,
I understand that there were lots of unethical mortgage brokers, but it sounds like you're throwing third party mortgage brokers in the "tools of crime"pot with the lax bankers and the crooked appraisers, if thats the case its unfair, brokers could not underwrite a loan, ultimately it
was the lax standard by the lender and the wreckless disregard by appraisers.

[mrincomestream]

Nelcisco-

Think points...and don't embarass yourself making comments like that

[Rich]

Sorry, Nelcisco, if you're an honest mortgage broker who's touchy about my characterization, but the fact of the matter is that mortgage brokers were the players in the real estate bubble who had absolutely no skin in the game (they play with opm, other people's money) and absolutely no supervision from the banks who bought their loans. It was a systemic problem, certainly the fault of the banks for being lax, but it makes them the weakest link in the system and an ideal position from which to carry out fraud (by making the unqualified appear qualified). It remains to be seen whether banks and credit card companies will in the future value turnover above risk, but if risk matters I don't see much future for mortgage brokering...

[Nelcisco]

I think you're right Rich regarding the future of mortgage brokers.

[monica]

i like all these fraud go to prison for rest they life
they not sorry what they doing or they done greed ego they leave nice life but now fbi doing that right things put then in prison please i feel sorry for people they are homeless because people fraud then for nothing god know when you doing bad thing prison time for these greed people

[monica]

even straw buyers they are fraud they own name so they can get money looser get real job,gang members they doing same thing san diego was that big bust fraud gang member get grip looser get real job put in prison fbi