Originally published January 9 2006
FBI investigates home loans suspected of mortgage fraud
by Mike Adams, the Health Ranger, NaturalNews Editor
Chris Swecker, assistant director of the FBI, discusses the prevalence of mortgage fraud in the U.S. over the past five years and how this has contributed to the housing boom.
Mortgage fraud in the United States has surged along with a five-year rally in the housing market, and federal officials are investigating $267 million in home loans, U.S. regulators and law enforcement agencies said on Wednesday.
"It is a pervasive problem and it's on the rise," said Chris Swecker, assistant director of the Federal Bureau of Investigation.
The FBI, Housing and Urban Development Department, Internal Revenue Service, U.S. Postal Inspection Service and Justice Department said an ongoing initiative has yielded indictments, arrests, convictions and sentences representing $606.8 million in losses to lenders from July through October.
The agencies said most of the fraud involved mortgage brokers who do not have a long history in the business and opened up shop within the past three years to take advantage of record loan volume amid the U.S. housing boom.
"America today enjoys the highest home ownership rate in its history -- almost 70 percent," said Kenneth Donohue, inspector general at the Housing and Urban Development Department.
"With this impressive achievement also comes a negative -- the highest level of fraud."
Still, Donohue said, the mortgage industry has a responsibility to police itself.
He warned that if it does not, "some outside group will have to step in."
Often the fraud officials have found involved other crime as well, including identify theft and the laundering of money generated from illegal activities, such as narcotics sales, the government said.
The regulators and law enforcement officials said they did not know how rising interest rates and a cooling in some of the frothiest local housing markets would impact the level of mortgage fraud.
Swecker said it would depend on whether mortgage brokers and bankers improve their lending practices.
The agencies dubbed California, Nevada, Utah, Arizona, Colorado, Missouri, Illinois, Maryland, Georgia and Florida as the top 10 hot spots for mortgage fraud in 2004.
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