Who Investigates Mortgage Fraud in the US

The US government has several agencies that investigate mortgage fraud. The Federal Bureau of Investigation (FBI) is one of the primary agencies responsible for investigating mortgage fraud.

The FBI works closely with other agencies, including the US Department of Housing and Urban Development (HUD) and the Consumer Financial Protection Bureau (CFPB), to identify and prosecute individuals and organizations involved in mortgage fraud.

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Mortgage fraud cases are investigated by the Harris County DA's Office, which receives weekly calls from the Texas Department of Saving and Mortgage Lending and "straw buyers" who have been talked into helping with a fraud scheme.

The office investigates 35 to 45 large cases a year, with a focus on stopping the large volume of flips to bring it under control in the shortest time possible.

Typically, mortgage fraud involves the investor, buyer, real estate agent, mortgage broker, appraiser, and title company, with the goal of obtaining a large sum of money in a short time.

A small number of people get caught up in pursuing the "American dream" of making money, but end up getting sucked into what they thought was an opportunity of a lifetime – but is really fraud.

Here is a general outline of the participants involved in mortgage fraud:

The FBI prioritizes fraud for profit cases, which involve industry insiders using their knowledge or authority to commit or facilitate the fraud.

The Harris County DA's Office has a robust process for investigating mortgage fraud cases. They receive weekly calls from the Texas Department of Saving and Mortgage Lending and from "straw buyers" alerting them to possible cases of mortgage fraud.

Their goal is to investigate cases that involve a large number of properties that are flipped by a so-called investor, as these cases can have a significant impact on the community. They aim to stop the large volume of flips to bring it under control in the shortest time possible.

The office investigates around 35 to 45 large cases a year, and this number has been increasing lately. This indicates a growing need for their services to combat mortgage fraud.

Mortgage fraud investigations can be complex, involving a large amount of paper evidence. The DA's Office must methodically examine these transactions to identify false information and build a strong case against those involved.

The office typically investigates cases involving an investor, buyer, real estate agent, mortgage broker, appraiser, and title company.

The FBI Investigation Process is a meticulous and multi-step procedure designed to uncover the truth behind mortgage fraud cases.

The FBI starts by gathering and analyzing data from various sources, including the Mortgage Electronic Registration System (MERS) and the Uniform Mortgage Data Program (UMDP).

FBI agents then conduct interviews with key individuals, such as loan officers, appraisers, and borrowers, to gather more information and identify potential suspects.

They also review financial documents and other records to identify any discrepancies or red flags.

The FBI may also use specialized tools, such as the Automated Underwriting System (AUS), to help identify potential mortgage fraud cases.

A thorough analysis of the evidence is conducted to determine whether a crime has been committed and to identify the perpetrators.

The FBI works closely with other law enforcement agencies, such as the Federal Housing Finance Agency (FHFA) and the Department of Justice (DOJ), to ensure a comprehensive investigation.

Ultimately, the goal of the FBI investigation process is to hold those responsible for mortgage fraud accountable and to prevent future cases from occurring.

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Financial institutions have a crucial role in preventing mortgage fraud, as they are often the first line of defense against fraudulent activities. They must establish robust internal controls to detect and prevent suspicious transactions.

Institutions must also ensure that their employees are properly trained to identify red flags and report suspicious activity. This includes training on identifying false or altered documents, as well as understanding the characteristics of common mortgage scams.

Financial institutions have a responsibility to verify the identity of borrowers and ensure that they are not using false or stolen identities to obtain a mortgage. This includes verifying Social Security numbers and other identifying information.

Institutions must also maintain accurate and up-to-date records of all mortgage transactions, including documentation of the property's value and the borrower's financial information. This helps to prevent fraudulent activity and facilitates the detection of suspicious transactions.

Financial institutions have a duty to report suspicious activity to the relevant authorities, such as the Financial Crimes Enforcement Network (FinCEN). This includes reporting any transactions that appear to be suspicious or unusual.

The Oregon Department of Justice is a top priority when it comes to protecting homeowners from scams. They aggressively pursue companies and individuals who engage in loan modification, foreclosure rescue fraud, and other mortgage-related scams.

The Oregon DOJ investigates and prosecutes the Mortgage Rescue Fraud Prevention Act and other mortgage and foreclosure rescue fraud offenses. Violations may incur civil and criminal penalties, including prison.

For more insights, see: Foreclosure Mortgage Loans

Some common scams to watch out for include phony offers of counseling or help, cons where homeowners unknowingly sign away their home, and lease-to-own schemes where a scammer claims to sell a house but pockets all the payments.

Here are some examples of mortgage-related scams to be aware of: