MORTGAGE FRAUD RUNS RAMPANT
Mortgage fraud is one of the in the United States, the U.S. Federal Bureau of Investigation (FBI) reports. In fiscal year 2005, nearly 22,000 incidents of suspicious activity were reported by the banking industry, up from 17,000 the year before. The FBI reports the loss from this crime was more than $1 billion in fiscal year 2005, compared with $429 million the previous year.
MORTGAGE FRAUD RUNS RAMPANT WASHINGTON, D.C. (fbi.gov) – Mortgage fraud is one of the fastest growing white collar crimes in the United States, the U.S. Federal Bureau of Investigation (FBI) reports. In fiscal year 2005, nearly 22,000 incidents of suspicious activity were reported by the banking industry, up from 17,000 the year before. The FBI reports the loss from this crime was more than $1 billion in fiscal year 2005, compared with $429 million the previous year. The FBI distinguishes between two types of mortgage fraud. Fraud for property, also known as fraud for housing, usually involves the borrower as the perpetrator on a single loan. This type accounts for 20 percent of all mortgage fraud.
Fraud for profit involves industry professionals. There are generally multiple loan transactions with several financial institutions involved. These frauds include numerous gross misrepresentations.
The borrower's debts are not fully disclosed nor is the borrower's credit history, which is often altered. Often, the borrower assumes the identity of another person (straw buyer). The borrower states he intends to use the property for occupancy when he or she intends to use the property for rental income or is purchasing the property for another party (nominee). Appraisals almost always list the property as owner-occupied. Down payments do not exist or are borrowed and disguised with a fraudulent gift letter. The property value is inflated (faulty appraisal) to increase the sales value to make up for no down payment and to generate cash proceeds.
Recently, the FBI joined with the Department of Housing and Urban Development, the U.S. Postal Inspection Service, the Internal Revenue Service and the Department of Justice in “operation quick flip,†a program created to fight what it considers a “growing epidemic.â€
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