FBI: Rise In Home Mortgage Fraud Cases An Indirect Effect Of The Subprime Crisis

Washington, DC (AHN) - Home mortgage frauds are on the rise and the Federal Bureau of Investigation expects more corporate fraud and public corruption cases to take place as a ripple effect of the subprime crisis.

Realty Times, citing FBI data, said potential mortgage fraud cases rose to 48,000 in 2007 from only 3,000 in 2003. By the end of this year, the FBI is expected to have received over 60,000 reports of fraudulent transactions involving home mortgages.

Among the common fraudulent practices were the use of fake applications, overvalued appraisals and similar measures designed to secure loan approval.

Because of the rise in home mortgage fraud cases, FBI director Robert Mueller, in a testimony before the U.S. Senate Appropriations panel, said he had to reassign some of the bureau's agents and resources from white collar crimes to concentrate on home mortgage cases.

From overvalued appraisals, the target now of fraud groups are foreclosures, reverse mortgages and subprime loans. Mueller, quoted by the Realty Times, said, "We are investigating more than 1,300 individual mortgage fraud matters. Perhaps more importantly, we have identified 19 corporate fraud matters related to the subprime lending crisis - cases that may have a substantial impact on the marketplace."

The identified mortgage hotspots were California, Texas, Arizona, Florida, Ohio, Michigan and Utah, which are high on the list of foreclosures and dipping home values.