Mortgage Fraud Is Investigated by the FBI and What Homebuyers Should Know

The FBI takes mortgage fraud very seriously, and for good reason. Mortgage fraud costs homeowners and the economy billions of dollars each year.

The FBI defines mortgage fraud as any material misstatement, misrepresentation, or omission made by a borrower, lender, or other industry participant to obtain a mortgage or to collect proceeds from a mortgage loan.

Homebuyers should be aware that mortgage fraud can take many forms, including false income or employment statements, fake appraisals, and straw buyers.

Mortgage fraud investigations are complex and time-consuming processes that require meticulous attention to detail. The FBI takes a multi-faceted approach to investigate mortgage fraud, involving various teams and experts.

The FBI's Mortgage Fraud Working Group was established in 2003 to coordinate and enhance mortgage fraud investigations nationwide. This group has been instrumental in identifying and addressing emerging mortgage fraud schemes.

Mortgage fraud investigations often involve reviewing financial documents, loan applications, and other records to identify discrepancies and inconsistencies. The FBI also works closely with other law enforcement agencies, such as the Department of Justice and the Securities and Exchange Commission.

The FBI has identified several common types of mortgage fraud, including property flipping, straw buyers, and false income statements. These schemes can result in significant financial losses for lenders, investors, and homeowners.

In one notable case, the FBI investigated a mortgage fraud scheme that involved a group of individuals who submitted false loan applications and used straw buyers to purchase properties. The scheme resulted in over $20 million in losses.

Mortgage fraud prevention is key to avoiding scams and schemes. Education is key to identifying and preventing mortgage fraud, as stated by the Federal Housing Finance Agency.

If you suspect mortgage fraud, report it to the authorities. The FBI is responsible for investigating mortgage fraud, and you can report it by calling 1-800-CALL-FBI (1-800-225-5324) or filling out an online FBI Tips and Public Leads Form.

To prevent loan scams, be aware of last-minute changes and call before sending a wire transfer, as advised by LendingTree. You can also visit PreventLoanScams.org for more information.

Here are some organizations you can report mortgage fraud to:

To prevent mortgage fraud, it's essential to be aware of common red flags. Inconsistencies in the loan file are often a tip-off that the file contains misrepresentations.

Be cautious of last-minute changes in the loan process, as this can be a sign of wire fraud. Call the lender before sending a wire transfer to verify the authenticity of the request.

Get contact information for all parties involved in the loan process from day one, and consider setting passcodes for secure communication. This can help prevent scammers from intercepting sensitive information.

Know the closing process and don't discuss finances via email, as this can be a breeding ground for scams. Verify the completed transactions to ensure everything is in order.

Some common mortgage scams to watch out for include foreclosure consultants and loan modification companies that prey on vulnerable homeowners. These scammers often market themselves as a "foreclosure rescue agency" or "loan modification company."

For another approach, see: Foreclosure Mortgage Loans

Here are some prevention methods to keep in mind:

Education is key to identifying and preventing mortgage fraud. Stay informed about the latest scams and schemes, and report any suspicious activity to the authorities.

In the US, certain types of incidents must be reported to the authorities. For example, if a company has 11 or more employees, they must report workplace injuries and illnesses to the Occupational Safety and Health Administration (OSHA) within a certain timeframe.

OSHA requires employers to submit a Form 300, which is a log of all work-related injuries and illnesses, and a summary of the log, known as a Form 300A, by February 1st of each year. This is to help track workplace hazards and prevent future incidents.

Employers must also report any work-related fatalities to OSHA within 8 hours of the incident. This is a critical step in ensuring that the cause of the fatality is investigated and that steps are taken to prevent similar incidents in the future.

Employers with 10 or fewer employees are exempt from reporting to OSHA, but they may still be required to report incidents to their state or local authorities.

A fresh viewpoint: How Mortgage Loans Work

Mortgage fraud is a serious issue that affects not just individuals, but also entire communities. The FBI takes mortgage fraud very seriously and investigates cases thoroughly.

The impact of mortgage fraud can be devastating, leaving homeowners with "underwater" mortgages and lenders with defaulted loans and foreclosed homes. In fact, a study found that real estate scams cost depository mortgage originators $5.34 for every $1 of fraudulent transactions.

Mortgage fraud is not just a problem for lenders; it also affects real estate professionals who need to rigorously screen new clients' financial portfolios. According to the United States Sentencing Commission, there were 47 mortgage fraud offenders sentenced in the federal system in fiscal year 2020.

The number of mortgage fraud offenders has decreased by 86.1% since fiscal year 2016, which is a positive trend. However, mortgage fraud is still a significant concern, and the FBI continues to investigate cases.

Here are some key statistics on the impact of mortgage fraud:

These statistics highlight the need for vigilance and awareness when it comes to mortgage fraud. By staying informed and taking precautions, individuals and businesses can help prevent mortgage fraud and protect themselves from its devastating consequences.