Fbi: Mortgage Fraud

[Will43]

Posted on Fri, Sep. 17, 2004

FBI: Mortgage fraud is rampant in U.S.

By CURT ANDERSON
Associated Press

WASHINGTON - Fraud is running rampant in the nation's mortgage industry, with nearly three times as many reports of suspicious activity so far this year compared with 2001, a top FBI official said Friday.
"It has the potential to be an epidemic," said Chris Swecker, FBI assistant director for criminal investigations.
Through the first nine months of 2004, mortgage companies and banks have reported more than 12,100 instances of suspicious activity compared with only 4,220 in 2001. The FBI currently has 533 pending mortgage fraud investigations, compared with 102 in 2001.
Law enforcement officials say the lending and refinancing boom that accompanied record low interest rates in the past few years is a key reason for the increased fraud. The FBI has identified several "hot spots" around the country where fraud is especially prevalent, including Florida, California, Nevada, Michigan, Missouri and Illinois.
"You can find this anywhere in the country," Swecker told reporters.
Robert M. Crouch, chairman of the Mortgage Bankers Association, said the industry has a Fraud Task Force working with the FBI to "expose these criminals and bring them to justice."
"Our lenders have seen an increase in the number and variety of fraudulent schemes over the last several years committed against them," Crouch said. "It has cost the mortgage banking industry and other financial service providers billions of dollars."
One common mortgage fraud scheme is "property flipping," in which property is purchased, appraised fraudulently at a much higher price and then quickly sold. The mortgage holder is then left with property worth much less than the loan it issued.
Other schemes involve fake identities and credit histories, use of "straw buyers" to conceal the true buyer's name and forged loan documents.
Mortgage fraud is one of several financial crimes that the FBI has been targeting for extra attention in recent months. This effort, which involves 47 FBI field offices, has resulted in more than 151 charges since early August in cases with potential losses to banks and other businesses of an estimated $3 billion.

 

[Ray Miller]

Where are the LOs and AMC heads. They act like they never hear or read about this. They still are applying pressure to meet value.

The only thing I can say is the poor fools and those poor stupid appraisers who go along with it. They will in time get what they sew. Free room and board, new job training.

I think we are just seeing the tip. Had two more FR for Fannie Friday when I got in. They were done last year and looks as if value was boosted because of the acreage and the type of construction. Both homes are new and super for the area they are in. Comps were over 35 to 45 miles out. If they used comps with in the 10 to 15 mile range value would be down $75K You just can't use Madison area comps out in the real rural area.

 

[Otis Key]

Ray - I have to agree with you - it is just the tip of the pimple and it's going to get real nasty. I just now finished writing up complaints against three "appraisers" here today. One is certified with a low number and the other two are a family package where one is certified low and the "trainee" is a relative. It's a real shame these A-holes can't just learn to do the job right. Oh well, it will come out in the wash - I hope!

 

[Red Blumenstock]

I was told by a prosecutor in PA that a FBI agent told him they were going to go after appraisers for Bank fraud since the penalty can be $1,000,000 and 30 years in jail - PER COUNT! They may not really pursue that but they are going to use it to get cooperation against the perpetrators. They will use it if necessary. I already know of one appraiser who was sued by three banks for 13 million $ in restitution. Ouch!

 

[Will43]

Originally posted by Ray Miller@Sep 19 2004, 04:37 PM
Where are the LOs and AMC heads. They act like they never hear or read about this. They still are applying pressure to meet value.

Most loan officers will not send the order until the appraiser guarantees value. If the appraiser is unwilling willing to cooperate, the loan officer simply calls the next person on the list.

Banks are just as bad. I have also received pressure from well-known banks. Loan officers refuse to do business with appraisers that will not guarantee their commission. 99% of loan officers are nothing more than common criminals.

Loan officers are given the right to steal. There is no business as corrupt as the mortgage business. There have been several news reports on car dealers. Hell, these people are honest compared to loan officers. I wish 20/20 or another news show would do a report on this corrupt business. They could interview appraisers. Also, they could set up a fake appraisal company.

Maybe we should contact the FBI?

 

[Otis Key]

Will - if our assistant AG doesn't do something next month on this one clown - I'm going to contact the FBI! I agree with you. It's really too bad that one of us doesn't have a contact with the national media.

 

[Don Clark]

B) Was in a 2 day meeting of the NCPAC(North Carolina Professional Appraisers Coalition). The head of the state banking commission spoke for an hour. Most of his presantation was about mortgage fraud, appraisers and lenders going to jail, the involvement of the FBI, the JD, and secret service. I got the distinct impression that we have another S&L crisis on our hands, except this time it will affect a global economy as banks with global ties are involved. Be careful out there, turn in skippy, turn in the LO's that pressure you, send copies of the forms you receive that wants a predetermined value to your state authority that regulates lenders and appraisers, or the state AG's office. If we do not become proactive in this we may be part of the problem rather than the solution.

 

[Nancy Wyatt]

Sometimes I just feel overwhelmed by all this. I just can’t believe this is happening. I’m still doing reviews where trainees are still working. Many of our good fellow appraisers are no longer able to survive and have taken meager jobs to support their families. Other good appraisers have had to reconcile the situation themselves and live on an austerity budget. I’m still hanging in there but unable to give much to my wonderful subcontractors that have been with me for years.

I have sent in about 10 appraisals to the board over the past few months. The board is currently working on 5 files I sent. (They send letters stating so). Most are fist time offenders and a letter gets put into their file. I spend lots of time preparing the reports for the board. I give them everything they could possibly need-Listings, sales, MLS CMA’s, maps, and my review report. It takes time.

I have another here done by a CG that stinks. It is from 2002 and they went out of the neighborhood for comps. Plenty of comps were available in the sub area. Even model matches. I have it sitting here, almost ready to go; but I’m sick right now and just getting weary of the whole process. Maybe tomorrow I’ll jump on it. Maybe not.

I need a pep talk.

 

[Nancy Wyatt]

Don-

I was writing as you posted.

Your words of encouragement (being proactive) are helpful.

Thank-you.

 

[Karl]

Lets watch & see the various Mortgage Co's that we have all had dealings with the particular type, that will suddenly be out of business or a name change. That will be the indicator that things are heating up. The problem being that there have been so many that have made a GREAT deal of money that they'll hang in there past the deadline & that'll be the ones we'll be reading about on a monthly bases depending a lot on the elections in NOV.