The FBI is setting up a mortgage fraud task force in its Washington, D.C., field office according to a recent report in the Washington Post. The task force, which is one of 34 nationwide, will attempt to devise a strategy to combat the increasing reports of questionable mortgage practices in the field office's jurisdiction of Washington, D.C., and Northern Virginia. According to Steve Kodak, a spokesman for the FBI, the number of fraud cases has skyrocketed since 2003.
"Mortgage fraud is up 400 percent over the past fours years," Kodak told BUILDER Online. "The numbers speak for themselves."
Nearly 47,000 suspicious activity reports of mortgage fraud were reported nationally in 2007, which translates to roughly $813 million in losses, Kodak says.
According to the FBI's 2006 Mortgage Fraud Report, the top 10 mortgage fraud areas are California, Florida, Georgia, Illinois, Indiana, Michigan, New York, Ohio, Texas, and Utah. Other problematic areas are Arizona, Colorado, Maryland, Minnesota, Missouri, Nevada, North Carolina, Tennessee, and Virginia. The report also revealed that there is a "strong correlation between mortgage fraud and loans that result in default and foreclosure."
Because Virginia was identified as a problematic area, the D.C. field office is establishing a regional task force.
"Northern Virginia was ripe for the pickings," said Adam Lee, a supervisory special agent with the D.C. field office. "We were concerned that there would be a problem there and [the area] would become a hot spot."
This house was used in a Mortgage Fraud Scheme (photo courtesy of the FBI)
Lee added that the department goal is to get in front of the wave of mortgage fraud reports by establishing some sort of framework to combat the issue.
Mortgage fraud has been on the FBI's radar since 2005 when the bureau received 21,994 reports of "suspicious" real estate activity nationwide. National efforts to fight shady mortgage practices were spearheaded then by a joint task force that included the FBI, the Department of Housing and Urban Development (HUD), the U.S. Postal Service, and the Internal Revenue Service. The D.C. field office looks to be fielding a similar model to battle an increasing number of cases in the region.
Nationally the 34 mortgage fraud task forces are located in 32 field offices. Two field offices, Cincinnati and Chicago, house two task forces. The other field offices that have mortgage fraud units are: Anchorage, Alaska; Albuquerque, N.M.; Atlanta; Buffalo, N.Y.; Charlotte, N.C.; Cleveland; Detroit; Dallas; Denver; El Paso, Texas; Honolulu; Houston; Indianapolis; Jackson, Miss.; Kansas City; Louisville, Ky.; Memphis, Tenn.; Miami; Milwaukee, Wis.; Minneapolis; Phoenix; Pittsburgh; Philadelphia; Portland, Ore.; Sacramento, Calif.; San Francisco; San Diego; Salt Lake City, Utah; Tampa; and Washington, D.C.
As the housing sector continues to reel from the latest downturn, the mortgage industry appears to be under a huge microscope. New York Attorney General Andrew M. Cuomo recently subpoenaed Fannie Mae and Freddie Mac in an attempt to conduct a total review of all Washington Mutual appraisals and mortgages purchased by the companies.
Illinois Attorney General Lisa Madigan launched a lawsuit in late November against One Source Mortgage, which was offering loans that had an introductory teaser rate that expired after one month and inadequate disclosure. According to the Washington Post, similar cases have been taken on by attorney generals in California and Ohio.