The Federal Bureau of Investigation wants mortgage brokers to do more to prevent fraud.
With mortgage fraud being a “significant” problem in more than half the country, the FBI is pushing for brokers — who are not required to report fraudulent or suspicious lending activity — to collaborate on reporting such data.
The FBI held a press briefing Wednesday at its Washington headquarters in which it encouraged and made recommendations for brokers to report any mortgage activity suspicious of fraud, FBI spokesman Paul Bresson said.
While the FBI compiles data on mortgage fraud through Suspicious Activity Reports filed by federally-insured financial institutions, reports by HUD and from complaints its receives from the industry at large, “a significant portion of the mortgage industry is void of any mandatory fraud reporting,” according to its May Financial Crimes Report to the Public.
And “the increased reliance by both financial institutions and non-financial institution lenders on third-party brokers has created opportunities for organized fraud groups, particularly where mortgage industry professionals are involved,” the government agency said in the report.
To combat the “growing and pervasive” problem of mortgage fraud, the FBI said its efforts include working to establish broader SAR reporting requirements for mortgage lenders and collaborating with the mortgage industry and Financial Crimes Enforcement Network to create a more productive reporting requirement for mortgage fraud.
In a collaborative effort with the FBI to promote and facilitate broker reporting of suspicious and fraudulent mortgage activity, the National Association of Mortgage Brokers announced earlier this week that its site — www.NAMB.org — features a link to the Internet Fraud Complaint Center, which is operated by the FBI and the National White Collar Crime Center.
“NAMB is very concerned about the increase in suspicious lending activity and mortgage fraud, which raises costs for consumers and brokers,” said the group’s President Bob Armbruster in the announcement. “By providing a direct link to the FBI on the NAMB Web site, it will be easier for consumers and industry professionals to report suspicious lending activities.“
The trade group noted that FBI investigations of mortgage fraud increased to 550 in fiscal year 2004 from 102 in fiscal year 2001.
“We encourage anyone aware of suspicious mortgage lending activities to notify the FBI,” he added.
The FBIs report also highlighted that, although the true level of mortgage fraud is largely unknown, recent analysis of industry fraud surveys identified 26 different states “as having significant mortgage fraud problems.” While Georgia and Florida were identified in each survey as having significant mortgage fraud related investigations, the analysis identified that states having mortgage fraud problems included nine in the South and Southwest, seven in the West and five in the Midwest.
Additionally, the agency’s report showed that the Top 10 Hot Spots for mortgage fraud incidents were in Georgia, Florida, South Carolina, Nevada, California, Utah, Colorado, Missouri, Illinois and Michigan.
