FBI Expects Massive Rise in Mortgage Fraud Cases
Posted Apr 18, 2008 2:04 PM CDT
By Martha Neil
The FBI is dealing with a deluge of new mortgage fraud cases in a real estate meltdown of unprecedented scope.
At a Senate hearing earlier this week, Robert Mueller, the agency's director, noted that the FBI now has more than 1,300 mortgage fraud investigations underway, reports the Associated Press. A New York Times story earlier this month says the 2007 fiscal year ended with almost 46,000 "suspicious activity reports and 260 convictions.
The situation is likely far worse than the savings and loan crisis of the 1980s. "And the breadth and depth of regulatory investigations and private litigation ... is unprecedented," reports GC California Magazine.
As part of a lengthy article, the magazine advises readers that government investigations and litigation related to the subprime mortgage crisis are likely to go on for years: "Companies should brace themselves and prepare for a prolonged wave of attacks and actively seek legal advice. More lawsuits can be expected, particularly against deep-pocket underwriters and financial institutions (and their officers and directors) involved in the securitization of subprime loans. More regulatory and criminal investigations are guaranteed."
Speaking yesterday at an American Bar Association meeting in Washington, D.C., Mueller essentially agreed with this analysis, according to ABC News. "We are targeting accounting fraud, insider trading and deceptive sales practices," Mueller said. "These investigations may well lead to other instances of fraud from investment banks and private equity firms to hedge funds."
Although the Federal Bureau of Investigation has created a new website focusing on mortgage fraud and is diverting staff from other areas to work on these cases, according to the New York Times article, its resources are clearly stretched by the sweeping scope of the problems.
ABAJournal.com: "Appraiser in $41M Georgia Fraud Explains US Mortgage Meltdown"
Orlando Sentinel: "As foreclosures soar, dreams die"
Orlando Sentinel: "Foreclosures leave painful ripple effect"
Star Tribune (reg. req.) (Minneapolis): "Two plead guilty in $35 million mortgage fraud scheme"
National Mortgage News: "Ohio Rental Property Owner Pleads Guilty to Mortgage Fraud Scheme"