FBI Estimates $14 Billion in Fraudulent Loans Originated in 2009

During fiscal year 2009, mortgage fraud suspicious activy reports referred to law enforcement were up 5.1% according to the Federal Bureau of Investigation’s 2009 Mortgage Fraud Report released on Thursday.

While the total dollar loss attributed to mortgage fraud is unknown, the FBI estimates that $14 billion in fraudulent loans were originated in 2009.

“Mortgage fraud is an insidious crime that has devastating economic effects on families, communities and the nation,” said FBI Director Robert S. Mueller, III. “The FBI remains committed to working with our law enforcement, regulatory, and industry partners to unravel these complicated fraud schemes driven by greed and bring their perpetrators to justice.”

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Analysis of available law enforcement and industry data indicates the top states for mortgage fraud during 2009 were California, Florida, Illinois, Michigan, Arizona.  The type of fraud schemes in fiscal year 2009 include loan origination, foreclosure rescue, builder bailout, equity skimming, short sale, illegal property flipping, reverse mortgage fraud and loan modifications.

In respect to reverse mortgage fraud, the FBI, HUD-OIG, and the US Treasury Department indicated it remains a high concern in FY 2009 and into FY 2010.  “HECM-related fraud is occurring in every region of the United States, and reverse mortgage schemes have the potential to increase substantially as demand for these products rises in demographically dense senior citizen jurisdictions,” said the report.

Below is an image included int he report showing counties potentially susceptible to reverse mortgage fraud.

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  • It would be instructive to see the percentages of fraud in HECM originations during the fiscal year ended September 30, 2009 in comparison to other real estate loans. It would be even more instructive to see those percentages stratified by types of fraud and then again by state.

    Are these government investigative agencies stating that they expect just the raw numbers to rise as the annual rate of reverse mortgage closings increase or are they saying that the percentage of fraud will accelerate as the numbers of closings rise? These kinds of vague expectations are not helpful.

  • Thank you for your comments James.
    I am surpised at the conservative figure of $14 Billion reported by the FBI. The fraud schemes mentioned, loan origination, foreclosure rescue, builder bailout, equity skimming, short sale, illegal property flipping, and loan modification are still prevalent today.

    I wonder if the existing availability of the Subprime Mortgage and Option Arm loans were included in the FBI report. I too, would like to see a report that is less vague and more tranparent.

  • Thank you for your comments James. rnI am surpised at the conservative figure of $14 Billion reported by the FBI. The fraud schemes mentioned, loan origination, foreclosure rescue, builder bailout, equity skimming, short sale, illegal property flipping, and loan modification are still prevalent today.rnrnI wonder if the existing availability of the Subprime Mortgage and Option Arm loans were included in the FBI report. I too, would like to see a report that is less vague and more tranparent.

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