While mortgage originations are at their lowest level since 2001, investigations for mortgage fraud have shot up in recent years. As of December 31, 2011, the FBI reported 2,590 pending mortgage fraud investigations with 71 percent involving losses of more than $1 million. Source:FBI
In 2007, there were 1,199 pending fraud causes, with a peak of 3,129 in 2010, according to an FBI financial crimes report. With increased levels of foreclosures and delinquencies over the past few years, mortgage fraud schemes targeting distressed homeowners as victims have surged as well.
In addition to mortgage fraud cases, mortgage fraud suspicious activity reports (SARs) saw a significant increase, with 46,717 reports in 2007, and 93,508 in 2011.
Through the year 2011, FBI mortgage fraud investigations led to 1,220 informations and indictments and 1,089 convictions. The uncovering of mortgage fraud cases brought $1.38 billion in restitutions; $116.3 million in fines; seizures valued at $15.7 million; and $7.33 million in forfeitures, according to the FBI report.
States with significant mortgage fraud problems in 2010 were Florida, New York, California, New Jersey, Maryland, Michigan, Virginia, Ohio, Colorado, and Illinois, according to Mortgage Asset Research Institute.
The FBI advises homeowners to be aware of offers which claim to save borrowers in distress and also advises against paying advances fees for promised services in return.
One type of mortgage fraud scheme involves scammers claiming they can negotiate loan modification terms on behalf of the borrowers with the lender while demanding large fees up front for the service they are purporting to offer.