Here’s another great story from the mortgage fraud department. Apparently, the real estate swindles were so great in numbers that the law enforcement community can’t possibly prosecute them all these days.
Already overloaded with "real" police work, authorities now admit that they are completely overwhelmed when it comes to the growing number of cases involving fraud in the mortgage world.
There are simply not enough hours in a day they say.
As such most of their efforts are now being put to use tracking down the bigger fish, including those with ties to organized crime rings.
In fact, officials now say that mortgage fraud had increasingly become the crime of choice among career criminals since it offered much lower risks and high profits. All of which proves that there is more than one way to knock off a bank.
It sure beats a hail of bullets and an exploding dye pack.
From the New York Times by John Leland entitled: Officials Falling Behind on Mortgage Fraud Cases.
"The number of mortgage fraud cases has grown so fast that government agencies that investigate and prosecute them cannot keep up, lenders and law enforcement officials have said.
Reports of suspected mortgage fraud have doubled since 2005 and increased eightfold since 2002. Banks filed 47,717 reports this year, up from 21,994 two years ago, according to statistics from the Federal Bureau of Investigation and the Financial Crimes Enforcement Network of the Treasury Department. In 2002, banks filed 5,623 reports.
"I don’t think any law enforcement agency can keep up with mortgage fraud, because it’s such a growth industry," said Chuck Cross, vice president of mortgage regulatory policy for the conference of state bank supervisors, an organization of regulators and bankers. "There’s too many cases, not enough agents."
Law enforcement agencies say they are overwhelmed, especially because investigating and prosecuting fraud can be complex and time consuming. The officials say career criminals and organized-crime rings have increasingly turned from other crimes to mortgage fraud because it offers lower risks and high profits.
"I could hire a dozen investigators and a dozen prosecutors and only scratch the surface," said David McLaughlin, a senior assistant attorney general in Georgia who coordinates prosecutions of mortgage fraud.
Losses involving federally insured banks totaled $813 million in the 2007 fiscal year, more than double the $293 million lost in the 2002 fiscal year.
These figures most likely represent "the tip of the iceberg," said the Mortgage Bankers Association, an industry group, because they do not cover mortgage brokers, who arrange more than half of new mortgages. The industry estimates the total loss this year at $4 billion.
Such cases are likely to multiply, said Constance Wilson, executive vice president of Interthinx, which develops fraud detection tools for the lending industry.
"The cases we’re seeing today are from 18, 24, 36 months ago, when the market was still good," Ms. Wilson said. "Now we’re going to see an increase in mortgage fraud, because all those loan officers, brokers and appraisers who were making six-figure incomes, now their back is against the wall. If that loan doesn’t close, they can’t make their home payment.
"So you have a desperation cycle," she said. "There’s a lot of push for them originate volume."
Easy money, speculation, and fraud…. the fuel of every bubble–including housing.
It was a world built on lies. And unfortunately it cannot hold.
By the way, here’s an article I wrote on mortgage fraud 16 months ago. It may give you an idea on what made it all made possible in the first place.