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Mortgage Fraud Increase Leads to FBI Crackdown

Posted On: July 9, 2008 by Marc Neff

The late 1990’s saw the beginning of a housing boom, brought on by Federal programs which made buying a home easier through government-sponsored loan programs; such as Fannie Mae and Freddie Mac. This led to a sharp appreciation in housing values throughout the country; however it also led to a growing rate of mortgage fraud. Mortgage fraud continues to top the list of white-collar crimes throughout the country, and is considered a major factor in the bursting real-estate bubble we see today. Even now that the bubble has burst, we continue to see an increased rate of fraud in the form of foreclosure fraud and subprime shenanigans, says Michael J. Anderson, who oversees the FBI’s white-collar crime division in the Dallas, Texas area.

Federal Agencies have stepped-up their efforts to crack-down on the problem of mortgage fraud. In an operation dubbed “Operation Malicious Mortgage”, 406 people have been charged in 144 different cases throughout the country, between March 1 and June 18 of this year. Over the past 3-years, the FBI’s mortgage fraud caseload has doubled to about 1,400 cases. Although neither Pennsylvania nor New Jersey is considered amongst the top-10 states experiencing mortgage fraud, cases have been brought in the Delaware Valley. The FBI is focusing its efforts on fraud committed by industry insiders, such as appraisers who inflate a properties value for purposes of attaining a loan. During the housing boom, this practice was masked by the fact that housing values were increasing, making the value catch-up to the inflated rate of appraisal. However once the bubble burst, housing values slowed to a halt, making such fraud easily apparent.

According to the FBI, common forms of mortgage fraud include Property Slipping, Silent Second, Nominee Loans/ Straw Buyers, Equity Skimming, Inflated Appraisals, and Foreclosure Schemes. According to Anderson, “Mortgage fraud has continued to be a growing crime trend and it’s just a matter of how quickly can law enforcement catch up.”

Mortgage Fraud is just one area of white-collar crime handled by our offices. Marc Neff has over 20-years of experience successfully defending those accused of fraud and similar white-collar offenses. The Law Offices of Marc Neff can assist in your defense. For a confidential consultation, please contact our office at your earliest co

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Posted in: Federal White Collar Crime