Mortgage Fraud - Other Background

Other Background

Mortgage fraud may be perpetrated by one or more participants in a loan transaction, including the borrower; a loan officer who originates the mortgage; a real estate agent, appraiser, a title or escrow representative or attorney; or by multiple parties as in the example of the fraud ring described above. Dishonest and unreputable stakeholders may encourage and assist borrowers in committing fraud because most participants are typically compensated only when a transaction closes.

During 2003 The Money Programme of the BBC in the UK uncovered systemic mortgage fraud throughout HBOS. The Money Programme found that during the investigation brokers advised the undercover researchers to lie on applications for self-certified mortgages from, among others, The Royal Bank of Scotland, The Mortgage Business and Birmingham Midshires Building Society.

In 2004, the FBI warned that mortgage fraud was becoming so rampant that the resulting "epidemic" of crimes could trigger a massive financial crisis. According to a December 2005 press release from the FBI, "mortgage fraud is one of the fastest growing white collar crimes in the United States".

The number of FBI agents assigned to mortgage-related crimes increased by 50 percent between 2007 and 2008. In June 2008, The FBI stated that its mortgage fraud caseload has doubled in the past three years to more than 1,400 pending cases. Between March 1 and June 18, 2008, 406 people were arrested for mortgage fraud in an FBI sting across the country. People arrested include buyers, sellers and others across the wide-ranging mortgage industry.