Fraud Cases Swell 63% as Agencies Step up Enforcement
Mortgage fraud cases increased nearly 63% from the Federal Bureau of Investigation’s (FBI) fiscal year 2008 to fiscal year 2009 through July 3, agency director Robert Mueller testified Wednesday to the Senate Judiciary Committee. The cause for the rise in cases is two-fold, Mueller said: The housing crisis gave more opportunities to those looking to commit fraud, and the bureau has stepped up its mortgage fraud enforcement. Most cases involve losses of more than $1m. The FBI assigned 300 special agents, and convened 15 task forces and 59 working groups to investigate mortgage fraud. The FBI’s improved its efforts with the use of new technology that identifies patterns that can detect potential fraud, Mueller said, adding the FBI focuses its investigations on industry insiders. “It is industry insiders who, in many instances, facilitate mortgage fraud,” he said. "By focusing on these facilitators we expect to maximize our finite resources." But the FBI isn’t the only government agency working to curb fraud. Treasury Department secretary Tim Geithner on Thursday announced enhanced collaboration between his department, the departments of Housing and Urban Development (HUD) and Justice (DOJ), the Federal Trade Commission (FTC) and the Financial Crimes Enforcement Network (FinCEN), along with state attorneys general, in combating mortgage fraud. Geithner said the agencies’ efforts include, “alerting financial institutions to emerging schemes, stepping up enforcement actions and educating consumers to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam.” Keeping consumers informed and vigilant is considered key to fighting mortgage fraud, according to a joint statement of the Treasury and other regulators. “Today's challenging economy presents an opportunity for con artists who prey upon financially distressed consumers,” FTC chairman Jon Leibowitz said. “If you're worried about keeping your home," he added, "avoid any company that asks for a large fee in advance, guarantees that they'll stop a foreclosure or modify a loan, or tells you to stop paying your mortgage company and to pay them instead.” Write to Austin Kilgore.