The incidence of mortgage fraud has spiked sharply in the past year and a half. In the third quarter of 2009, it is estimated that fraudulent mortgage-related activity increased 7.5 percent over the same time period in 2008. Mortgage fraud investigations have increased due to the large number of loan defaults and foreclosures which result in scrutiny of loans that were made prior to the recession. This increase in mortgage fraud prompted the Obama administration to create a new task force aimed at identifying and combating the illegal activity, especially in "suspicious activity" hot spots like California and Florida.
The new Financial Fraud Enforcement Task Force (FFETF) is comprised of representatives from 23 federal agencies including: the departments of Justice, Treasury, Commerce, Housing and Urban Development, Homeland Security, as well as the Securities and Exchange Commission and the Federal Trade Commission. Though the FFETF aims to combat a broad range of fraudulent activity - including health care fraud, securities fraud and financial discrimination - its initial primary focus is mortgage fraud. Spokespeople for the FFETF have indicated a strong commitment to prosecuting those who have defrauded mortgage holders during the Great Recession.
What Kinds of Mortgage Fraud is the FFETF Targeting?
The term "mortgage fraud" encompasses a wide range of fraudulent practices that are deceptive in nature The FFETF is committed to detecting and prosecuting perpetrators that have "infiltrated every part of the loan industry." Those being targeted by the FFETF for investigation include individuals who:
The formation of a federal task force aimed solely at reducing mortgage fraud is sure to increase the volume of mortgage fraud investigations. Generally speaking, nearly 60 percent of FDIC investigations begin when a "suspicious activity report" (SAR) is filed by a financial institution. It is likely that the investigations instigated by federal and local agencies and law enforcement at the urging of the FFETF will commence in a similar manner.
The total mortgage fraud-related SARs filed by financial intuitions increased nearly ten-fold from 2003 to 2009. The vast bulk of these SARs have been filed against parties in California and Florida; financial institutions have filed more SARs against businesses and individuals in these two states than in any other. This is due to the large number of loan defaults in Florida and California which cause an in depth review of the loan files. In addition, Fannie Mae named Florida first in the nation for loan-origination fraud in 2008 and 2009, and South Florida has had more residents named in SARs than any other region in the country.
Attorney General Eric Holder has stated that the FFETF will be, "relentless in our investigation of corporate and financial wrongdoing, and we will not hesitate to bring charges, where appropriate, for criminal misconduct" of fraudulent parties. The boast seems to be well-founded, given the breadth of the task force's influence and the fact that it is adequately backed financially: The operating budget for the task force is nearly $250 million a year for 2010 and 2011, which will allow it to devote a great deal of law enforcement's time and energy to investigating and prosecuting mortgage fraud.
For Further Reference
Mortgage fraud investigations are expected to increase and intensify as the FFETF becomes more firmly established. If you have come under investigation for mortgage fraud - or anticipate that you could - contact an experienced criminal defense attorney immediately to protect your rights.
Rob, Former Client
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