Active mortgage fraud cases at the Federal Bureau of Investigation have recently ballooned, according to congressional testimony yesterday.
The number of mortgage fraud investigations currently pending at the agency is 1,200, FBI Director Robert S. Mueller III testified to the Senate Judiciary Committee yesterday, according to an FBI transcript of his prepared testimony. The current level of open investigations is 50 percent higher than 2006.
Mueller noted losses in about half the cases are more than $1 million, while several cases have losses greater than $10 million.
In January, the bureau reported 15,000 Suspicious Activity Reports were received in its fiscal first quarter 2008 which began on Oct. 1, 2007. At that rate, SARs could reach 60,000 during all of fiscal 2008 — well above the 48,000 in fiscal 2007.
Cases opened in 2007 were 1,210, up from 818 cases in 2006 and just 436 cases in 2003, according to the January data. While the FBI only investigates cases involving at least $500,000, 34 task forces or working groups consisting of members of various federal, state and local agencies addressing mortgage fraud were investigating smaller cases.
“To date, the FBI has initiated subprime mortgage industry corporate fraud cases, in coordination with the Securities and Exchange Commission, on the basis of allegations of accounting fraud associated with subprime lenders, the securitization of subprime loans, and corporate investment in securitized subprime related investment products,” Mueller stated. “We also stood up a Mortgage Fraud Working Group with the Department of Justice and several federal law enforcement and regulatory agencies.
“Together, we will build on existing FBI intelligence databases to identify large-scale industry insiders and criminal enterprises conducting systematic mortgage fraud.”
