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Mortgage fraud on the increase

This just in from the Department of the Obvious: Mortgage fraud is on the rise and the subprime lending crisis is a contributing factor.

Sorry to be a bit snarky, but I think we all know this by now. The FBI, however, wants to make sure, just in case.

In a report released today, the agency said that by the end of last year, its investigators were handling just over 1,200 mortgage fraud investigations, a 47 percent increase from 2006 and a whopping 176 percent increase from 2003. And yes, the FBI press release used the word "whopping."

Other report highlights:

  • 46,717 Suspicious Activity Reports (SARs) were filed in connection with mortgage fraud in 2007. The 2006 number was 35,617; in 2003, the FBI got just 6,936 mortgage fraud SARs.
  • The financial cost of mortgage fraud is difficult to quantify, but likely astronomical. The FBI said only 7 percent of last year's SARs documented an exact dollar amount in terms of losses, but the total loss from that small percentage was $813 million.
  • The variety of mortgage schemes include builder-bailouts, seller assistance, short sales, foreclosure rescue, and identity theft exploiting home equity lines of credit.
  • The nation's top 10 mortgage fraud hot spots in 2007 were Florida, Georgia, Michigan, California, Illinois, Ohio, Texas, New York, Colorado, and Minnesota (in red below; the blue states are also "significantly affected" by mortgage fraud).

Mortgage_fraud_hot_spots_fbi_report

Getting back to that subprime bombshell, the FBI said these high-interest, high-risk loans, designed for people with poor or limited credit histories, remain a key factor in influencing mortgage fraud directly and indirectly.

The subprime share of outstanding loans has more than doubled since 2003, according to the report, putting a greater share of loans at higher risk of failure.

During 2007, nationally there were more than 2.2 million foreclosure filings reported on approximately 1.29 million properties; that's a 75 percent increase from 2006.

You can read the full report here, as well as check out the FBI's special mortgage fraud Web page.

We now return you to your regularly scheduled blogging program.

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