FBI Warning: New Mortgage Scams On The Rise

Washington, D.C. (AHN) - The Federal Bureau of Investigation on Tuesday reiterated its warning against mortgage scams, saying the fraudulent activities are likely to escalate with the extended housing market slump.

In a report, the FBI said it recorded 46,717 cases of mortgage fraud last year, compared to 35,617 in 2006. The scams cost the industry some $813 million.

According to the bureau, mortgage fraud is "the intentional misstatement, misrepresentation, or omission by an applicant or other interested parties, relied on by a lender or underwriter to provide funding for, to purchase, or to insure a mortgage loan."

Agence France-Presse said people in finance-related occupations, including accountants, mortgage brokers, and lenders are the common perpetrators of mortgage scams. They, in turn target borrowers, mortgage industry entities, and residents of the neighborhoods affected by mortgage fraud, the FBI report stated.

On May 9, Newsday said two men from Brooklyn, New York were arrested for using their defunct mortgage company for a series of scams, including $44 million in home loans funded by Fannie Mae, the federally sponsored pool of home mortgages.

Leib Pinter, 64, and Barry Goldstein, 59, were charged with conspiracy, wire and mail fraud.

According to Newsday, Pinter was said to have misappropriated $44 million earmarked for the refinancing of 257 original home mortgages. Goldstein,on the other hand, was charged for falsifying bad loan repayment histories so that investment banking firm Credit Suisse First Boston would repurchase the mortgages.

The FBI is warning the public to be wary of new and improved mortgage schemes.