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Mortgage Fraud Stats

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The Federal Bureau of Investigation touted more than $0.5 billion in mortgage fraud restitutions last year.

In its Financial Crimes Report the Public for Fiscal Year 2007, the FBI reported 1,204 mortgage fraud cases were pending as of Sept. 30, 2007, climbing from 818 cases at fiscal yearend 2006.

Those cases resulted in 321 indictments, the FBI said. Of those indicted, 260 ended up with convictions.

The bureau touted $595.9 million in restitutions made in 2007 and $21.8 million in recoveries. In addition, $1.7 million in mortgage fraud fines were levied.

One of the mortgage fraud cases cited by the FBI in the report was against attorney Raymond J. Costanzo Jr.

He allegedly paid as much as $600,000 to unqualified straw borrowers who participated in millions of dollars of fraudulent transactions. Costanzo himself obtained more than $1.5 million in bogus loans where he was the borrower — netting $250,000. He was sentenced on Feb. 1, 2008, to more than three years in prison and ordered to pay $7.8 million in restitution.

Another defendant, Christopher Craig, pled guilty to obtaining $1.2 in loan proceeds from fraudulent home-equity loans made by Washington Mutual Bank. Craig allegedly would identify delinquent borrowers and promise to lend them money. Instead, however, he created documents deeding their properties to straw buyers, then submitted bad HEL applications for the fake borrowers. Craig ended up with a five-year prison sentence and an order to pay $1.0 million in restitution.

Related:

Alt-A Fraud Worse than Nonprime
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