MoneyMatters101.com Home
Mortgage Information

Adjustable Rate Mtg.
Build Equity Fast
Changing Interest Rates
Commercial Basic
Commercial Info
Commercial Mtg.
Don't Be Fooled
Fifteen Year Mtg.
Interest Rate Lock In Modification Scams
Mortgage Definitions
Mortgage Fraud
Mortgage Fraud Victims
Mortgage Modification
Mortgage Notes
Mortgage Protection
Mortgage Types
Predatory Lending
Qualifying Tips
Question The Broker
Remortgage Benefits
Reverse Mortgage
Reverse Mortg. Facts
The FBI Investigates
The Mtg. Meltdown
The Mtg. Process
Is It Time To Refinance?
Types of Fraud
Unconventional Mtg.
Where Is The Help


Email Us

Home Loans
PMI Insurance




Mortgage Fraud

Increased incidences of mortgage fraud has prompted the Federal Bureau of Investigations (FBI) to investigate the huge numbers of foreclosures instigated by deceptive loan practices by individuals, investment banks, mortgage companies, securities dealers, hedge funds, real estate brokers, and others who have profited dishonestly.

According to the FBI, mortgage fraud is defined as the intentional misstatement, misrepresentation, or omission by an applicant or other interested parties, relied on by a lender or underwriter to provide funding for, to purchase, or to insure a mortgage loan. Although no central repository collects all mortgage fraud complaints, statistics from multiple sources indicate that mortgage fraud is on the rise.

Also according to the FBI, some industry explanations for this increase point to recent high mortgage loan origination volumes that strained quality control efforts, the persistent desire of mortgage lenders to hasten the mortgage loan process, the escalation of home prices in recent years, and the introduction of non-traditional loans which contain fewer quality control restraints such as low documentation and no documentation loans.

Hundred of real estate industry professionals have been indicted recently on charges of wire fraud, securities fraud, foreclosure scams, conspiracy to mislead investors, and fraud stemming from the housing crises that is currently plaguing the country.

Recent statistics reveal that by the time the current housing crisis is over, billions of dollars will have been lost to borrowers do to fraud and other unethical business practices.

FBI Statements:

  • The increased reliance by both financial institutions and non-financial institution lenders on third-party brokers has created opportunities for organized fraud groups, particularly where mortgage industry professionals are involved.
  • Combating significant fraud in this area is a priority, because mortgage lending and the housing market have a significant overall effect on the nation's economy.
  • All mortgage fraud programs were recently consolidated within the Financial Institution Fraud Unit, even where the targeted lender is not a financial institution. This consolidation provides a more effective and efficient management over mortgage fraud investigations, the ability to identify and respond more rapidly to emerging mortgage fraud problems, and a better picture of the overall mortgage fraud problem.
  • Each mortgage fraud scheme contains some type of "material misstatement, misrepresentation, or omission relied upon by an underwriter or lender to fund, purchase or insure a loan." The Mortgage Bankers Association projects $2.5 trillion in mortgage loans will be made during 2005.
  • The FBI compiles data on mortgage fraud through Suspicious Activity Reports (SARs) filed by federally-insured financial institutions, and Department of Housing and Urban Development Office of Inspector General (HUD-OIG) reports. The FBI also receives complaints from the mortgage industry at large.
  • A significant portion of the mortgage industry is void of any mandatory fraud reporting. In addition, mortgage fraud in the secondary market is often under reported. Therefore, the true level of mortgage fraud is largely unknown. The mortgage industry itself does not provide estimates on total industry fraud. Based on various industry reports and FBI analysis, mortgage fraud is pervasive and growing.

Book of the Month

Advertise on MoneyMatters101.com



Accessibility Policy| Terms Of Use| Privacy Policy| Advertise with Us| Contact Us

Use of this web site constitutes acceptance of the Terms of Use.

We are looking to create more mutually beneficial partnerships. If you are interested in partnering with MoneyMatters101.com, send us your proposal.


Link to MoneyMatters101.com