Though no one knows the full extent of what the FBI is calling “one of the fastest-growing white-collar crimes in the United States,” recent data from the Treasury Department and the FBI indicate that mortgage loan fraud is on the upswing.
Using the most recent data available, Treasury’s Financial Crimes Enforcement Center found a 35 percent increase in fraud-related suspicious activity reports for first quarter 2006 as compared with the same period in 2005.
The study, released in November, found a striking 92 percent spike in the number of reports between 2003 and 2004 and a total surge of 1,400 percent in suspected mortgage fraud incidents between 1996 and 2005.
Though the suspicious activity reports only cover suspicious activity — and could reflect increased vigilance by lenders — the number of actual convictions for mortgage fraud is also up.
Separate FBI statistics show a 131 percent increase in mortgage fraud convictions between 2001 (the earliest year for which data is available) and 2006. A second FBI report cited Maryland — along with other mostly western states — as hotspots for mortgage fraud in 2004.
“It seems pretty safe to conclude that the suspicious activity is actual fraud” based on the number of arrests and convictions for mortgage fraud the FBI is reporting, FinCEN spokesman Stephen Hudak said.
That fraud can skew the information used to evaluate a home’s worth and artificially inflate home prices. Dealing with fraud also drives up lenders’ costs — costs that get passed on.
“It’s very similar to retail theft,” Provident Bank managing director Pete Georgopoulos said. “If people are stealing clothes out of stores, you have to make a mark-up to stay in business. So, I guess everybody pays.”
