The FBI has released a comprehensive report detailing the state of mortgage fraud in the country. According to their research, the states most affected by mortgage fraud and other real estate crimes are the same states where housing prices escalated rapidly during the mid-2000s: California, Florida, Michigan, Nevada, Arizona, Texas, New York, Illinois, Georgia and New Jersey.
The most prevalent mortgage fraud schemes reported by law enforcement agencies and private industry during fiscal year 2010 included loan fraud in the origination process, mortgage rescue fraud, real estate investment fraud, equity skimming, short sale fraud, illegal property flipping, title fraud, escrow fraud (incl. settlement), commercial loan fraud, builder bailout schemes, loan modification fraud and reverse mortgage fraud.
The FBI notes that short sale fraud has become so prevalent that organized crime committed by Asian, Armenian, Balkan, Eurasian, Russian and La Costra Nostra groups has infiltrated lending institutions in order to have access to financial information, mortgage origination software, notary seals and licensure information.
In other words, all forms of real estate fraud are alive and well and it is being committed by both licensed real estate professionals and unlicensed individuals and criminal organizations. Law enforcement is bailing water out of a ship that needs enormous reinforcements just to stay afloate.
This is an excellent report with a lot of detail and is well-worth reading.
Click here to read the report on the FBI’s website. There is also an excellent synopsis on Inman News.