As if struggling homeowners don’t have enough to worry about: the Federal Bureau of Investigation (FBI) is reporting that mortgage fraud is on the rise. 
In a report released last week, the FBI says that consumer complaints are now coming in at a record pace, underscoring the seriousness of the problem.
The FBI reports receiving 46,717 Suspicious Activity Reports related to mortgage fraud in 2007compared to 35,617 in 2006 and just 6,936 in 2003. Although just 7% of the reports cited an exact dollar loss, the total reported losses for 2007 was $813 million. The FBI says that their case load for mortgage fraud increased 47% in 2007 over 2006.
Citing the continued housing slump as one of the reasons for increased fraud, the FBI says that the current market is “…further incentive for shady real estate industry insiders to look for dishonest ways to turn a profit and growing opportunities for scam artists to prey on vulnerable homeowners.”
The FBI has identified the top 10 hotspots nationwide for mortgage fraud in 2007, which were carefully mapped from multiple public and private sources: Florida, Georgia, Michigan, California, Illinois, Ohio, Texas, New York, Colorado, and Minnesota. The north-central region of the US had the largest share of mortgage fraud, followed by the west and southeast regions.
Among the current mortgage scams the FBI has cited the following:
- Builder-bailout” schemes where developers unload excess inventory through financial trickery.
- Foreclosure rescue frauds that trick homeowners into signing over the deed to their house.
- Seller-assistance scams that use false appraisals to sell homes.
- Identity theft that leads to home equity credit lines being opened and drained.
Visit the FBI’s site to obtain your copy of their 2007 Mortgage Fraud Report.
