Losses from mortgage fraud ballooned to $1 billion last year, and the Federal Bureau of Investigation is blaming mortgage brokers for the increase. Meanwhile, Los Angeles is the star in an upcoming FBI report.
Federal Bureau of Investigation spokesman Steve Kodak has confirmed the figures to MortgageDaily.com.
An entire report on mortgage fraud will be released within a few weeks, Kodak said. He would not comment further on the numbers or offer an analysis or perspective on the report.
“In a couple of weeks the end of the fiscal year report will have the new data,” Kodak said in a brief phone interview. “I’m not going to speculate right now.”
Kodak did confirm that the report will show that mortgage fraud losses totaled $1 billion in 2005 and $545.9 million for the first half of the year. The total is more that double the total losses for all of 2004.
A major increase in the number of Suspicious Activity Reports, or SARs, made by financial institutions will also be included in the report.
In 2004 SARs totaled 21,994, Kodak confirmed. But just during the first half of 2005 institutions filed nearly 17,000 SARs.
The report will also detail the regions being hit hard by instances and reports of mortgage fraud.
Leading the pack is Los Angeles, with 2,293 reports of mortgage fraud reports through Sept. 25. Others in the unenviable top 10 are Atlanta (1,459); Chicago (1,245); Miami (1,191); San Francisco (942); Detroit (914); New York (907); Dallas (635); Phoenix (631); and Houston (618).
In May, the FBI reported that mortgage fraud would increase throughout the rest of the year.
“Based on various industry reports and FBI analysis, mortgage fraud is pervasive and growing,” the agency said in a report, Financial Crimes Report to the Public.
The FBI put at least part of the blame on the industry’s growing reliance on mortgage brokers to cultivate lenders in the booming housing market.
“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 FBI said in the May report.
