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Home » Consumer Information » White Collar Crime » Financial Crimes

Mortgage Fraud

The FBI investigates mortgage fraud issues with their Economic Crimes Unit II, a part of the financial crimes investigation division. FBI agents collect information regarding these crimes by using reports called Suspicious Activity Reports, or SARs. These are saved into an overall database and used as a tool in the ongoing battle against mortgage fraud.

There are many examples of mortgage related frauds:

Profiteering

Participants in this scam will offer loans for properties that do not actually exist or claim property values of homes are much higher than they are actually worth. This allows them to charge large amounts of money and keep the extra profit for themselves.

Equity skimming

In this scheme, a financial investor will work with a second party who acts as a Buyer in order to purchase a home. The mortgage will be drawn in the Buyers name, but as soon as the loans close, the Buyer signs the mortgage back over the investor. The investor then rents out the home in order to receive income, but does not pay the mortgage and eventually allows the property to be foreclosed on.

Property flipping

Flipping involves the scam of appraising the value of a home at a much higher rate than it should be. This inflated appraisal amount will help the house to be sold for much more money than it is actually worth. The home is usually sold several times, or flipped, for higher prices each time. The final buyer of the home may purchase it for thousands of dollars more than it is actually worth.

Stolen identity

Con artists have many ways to obtain personal information from victims and "steal" their identity. These stolen identities are sometimes used on loan applications in order to get a loan approved. Once the loan goes through, the scammers will keep the money, and the bills will go to a victim who previously had no idea their name was used.

Foreclosure prevention

Scammers will contact home owners who are at risk of being foreclosed on, and offer to provide assistance that will allow them to keep their house. They will convince their victims to pay seemingly reasonable fees in exchange for this service, but once the fees are paid the scammers disappear.

The FBI primarily investigates cases in which mortgage industry insiders commit fraudulent schemes in an attempt to rip off the public. Take steps to avoid being a victim by thoroughly researching any mortgage related contract before you sign it and make sure you understand and agree to all the terms and conditions within. A reputable agent will walk you through the entire process and take the time to explain every detail and answer all of your questions.