Mortgage Fraud

To combat the rising number of mortgage fraud cases nationwide, the Mortgage Bankers Assn. has launched an online anti-fraud resource center. The website, which features fraud alerts and mortgage-industry news, aims to help lenders "prevent, investigate, and combat mortgage fraud," according to the site. The site posts information about mortgage crimes and provides links to report such activity. The website, mbafightsfraud.mortgagebankers.

Reports of suspected mortgage fraud rose 42% last year as banks became more leery of lies on loan applications. The Treasury Department's Financial Crimes Enforcement Network said Thursday that there were 52,868 reports of mortgage fraud in 2007, up from 37,313 a year earlier. Mortgage fraud reports were the third-most common type of suspicious activity.

Don't even think about fudging on your application for a mortgage by inflating your income a tad, checking the box to indicate you're going to live there when you're really not or exaggerating your job description. Not long ago, people could get away with lies like these to obtain financing. But not anymore. Nowadays, the tools are in place to nab fibbers who just want to buy a house, as well as out-and-out perjurers looking to bilk lenders out of hundreds of thousands of dollars.

Stepped-up law enforcement and increased banking scrutiny appear to be curbing the rate of mortgage fraud in some areas of the country, including California and Nevada, prompting determined schemers to take their business to other states. Nearly a year after the FBI set up a task force in Southern California, the state has dropped from fourth place to eighth for mortgage fraud, according to a report released Monday by the Mortgage Asset Research Institute, a branch of data firm LexisNexis.

Fraud is running rampant in the nation's mortgage industry, with nearly three times as many reports of suspicious activity so far this year compared with 2001, a top FBI official said Friday. "It has the potential to be an epidemic," said Chris Swecker, FBI assistant director for criminal investigations. Through the first nine months of 2004, mortgage companies and banks have reported more than 12,100 instances of suspicious activity compared with only 4,220 in 2001.

Countrywide Financial Corp. is suing an Indianapolis man, accusing him of orchestrating a mortgage fraud scheme in which dozens of Virginia residents were tricked into buying homes in Indiana at inflated prices. The Calabasas-based lender alleges that Robert Penn worked with relatives in Virginia and associates that included appraisers and mortgage companies to defraud the victims in a case that could total about $80 million in loans.

A Tarzana tax preparer has been sentenced to five years' probation for his role in a $7.6-million mortgage fraud scheme that involved the purchase of expensive houses in Ventura and Los Angeles counties. Arnold Arend, 62, who pleaded guilty to two counts of mail fraud, was also ordered to pay $10,000 in restitution, Assistant U.S. Atty. Peter Spivack said. The restitution is "a drop in the bucket, compared to the total losses in this case," Spivack said.

Ten men were charged with defrauding more than a dozen mortgage lenders, including Lehman Bros. Holdings Inc., HSBC Holdings and Fremont General Corp., in a scheme prosecutors said used buyers with fake identifies. The leaders got loans through a mortgage brokerage they ran, authorities said in a warrant unsealed Wednesday in federal court in New York.

Federal officials have frozen the bank accounts of a porn actress who was being wooed by a Carlsbad, Calif., businessman accused of orchestrating a multimillion-dollar mortgage fraud. Securities and Exchange Commission officials say they do not believe actress Kelly Cook, also known as Kelly Jaye, violated securities laws. But regulators are seeking to freeze the assets in order to recover any money improperly taken from investors. The SEC alleges that Cook's one-time boyfriend, Michael J.

With Wall Street executives handcuffed and paraded in front of TV cameras and dozens of alleged mortgage scam artists arrested in cities nationwide, the penalty phase of the mortgage meltdown has begun in earnest. The Justice Department said Thursday that more than 400 real estate industry players, including dozens in recent days, had been charged since March in a federal crackdown on incidents of mortgage fraud that have contributed to the housing crisis.