Mortgage Fraud

The high volume of loan transactions creates a volatile arena with many players and forms of mortgage fraud which include falsely inflating the value of the property, or issuing loans based on fictitious properties and or persons (straw buyers), fabricating complete appraisals, and identity theft of the real estate appraiser.

The true level of mortgage fraud is largely unknown. The mortgage industry itself does not provide estimates on total industry fraud. The Federal Bureau of Investigation (FBI) has estimated that fraud cost mortgage lenders as much as $4.2 billion in 2006 alone. This growing trend is troubling for many reasons, but most significantly because fraud-related costs and losses incurred by lenders are ultimately passed on to their customers, increasing the cost of homeownership for all borrowers.

The Financial Crimes Enforcement Network (FinCEN), a bureau under the U.S. Department of the Treasury has reported that the number of mortgage-related Suspicious Activity Reports (SARs) filed has increased an average of nearly 60 percent per year over the past four years.