Mortgage Daily

Published On: May 20, 2009
Flood of Mortgage Fraud Cases Expected to ContinueFBI director testifies before House committee

May 20, 2009

By MortgageDaily.com staff

The number of mortgage fraud cases being investigated by the Federal Bureau of Investigation increased by more than one-third last year, and no signs of easing are on the horizon. But the chief of the agency said it is deploying new methods and leaning on old ones to fight mortgage fraud.

FBI Director Robert S. Mueller II made his comments in prepared testimony today before the House Judiciary Committee, according to a transcript of his presentation.He said the agency’s mortgage fraud caseload has jumped from fewer than 900 cases to more than 2,400 during the past three years.

“Unfortunately, there is no sign that our mortgage fraud caseload will decrease in the near future,” Mueller testified. “To the contrary, Suspicious Activity Reports from financial institutions have indicated a significant increase in mortgage fraud reporting filed with the Financial Crimes Enforcement Network.”

SARs tied to mortgage fraud jumped 36 percent in fiscal 2008 to 63,173. Losses on just 7 percent of mortgage fraud SARs filed during 2008 were more than $1.5 billion — suggesting overall losses could be more than $4 billion.

photo of Robert Mueller
FBI photo of Robert Mueller

So far in fiscal 2009, which began on Oct. 1, 2008, the number of mortgage fraud SARs filed is 33,291.To meet the growing caseload, the number of agents assigned to mortgage fraud investigations has more than doubled from 120 in fiscal 2007 to more than 260 currently.

One new method that the FBI utilizes to detect and combat mortgage fraud involves a property flipping analytical computer application. The application was initially developed for the Baltimore area but soon expanded nationally.

Mueller highlighted the creation of the National Mortgage Fraud Team at the bureau’s headquarters that will assist field offices with mortgage fraud issues.

“One of the best tools the FBI has for combating mortgage fraud is its long-standing partnerships with government and industry partners,” the director added. “Currently, there are 18 mortgage fraud task forces and 50 working groups across the country.”

Government partners include the U.S. Department of Housing and Urban Development, the Federal Deposit Insurance Corporation and state and local law enforcement officers.

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