MORTGAGE FRAUD IS TOP WHITE COLLAR CRIME

Organized Crime Digest, Dec 15, 2005

The Federal Bureau of Investigation said real estate fraud has exploded to more than $1 billion a year due to higher home prices and lax regulation.

In disclosing the value of mortgage fraud had more than doubled from only a year earlier, the FBI reported on some of the results of its "Mortgage Fraud Operation Quick Flip."

Mortgage Fraud is one of the fastest growing white-collar crimes, accounting for 20 percent of all fraud in the United States and involving identity theft, unscrupulous appraisers, realtors, builders and financiers.

The FBI identified the hot spots for mortgage fraud activity in 2004 (per capita) as: California, Nevada, Utah, Arizona, Colorado, Missouri, Illinois, Maryland, Georgia, and Florida.

FBI Assistant Director Chris Swecker said a large part of the problem has been the decline in oversight from banks issuing loans, and federal and state regulatory agencies.

In the drive to make the lending process easier, Swecker said many safeguards have been discarded.

Typical mortgage and foreclosure scams include:

* Falsified application data such as citizenship, employment history, income and credit history, allowing an unqualified buyer to obtain a loan.

* Property flipping: Property is purchased and falsely appraised at a higher price and quickly resold.

* Silent second: Buyer borrows down payment from seller through a nondisclosed second mortgage.

* Inflated appraisals: Appraiser acts in collusion with a borrower and provides a misleading report.

* Air loans: Falsified loan documents, including appraisals, to obtain a loan on a nonexistent property.

* Foreclosure rescue scams: Homeowners either pay an exorbitant upfront fee for little or no services, or sign a quit claim deed, transferring ownership for a nominal payment.

* Equity skimming: Property is acquired with a promise to use rent money to continue making mortgage payments.