Mortgage fraud soars, FBI reports

Mortgage fraud continues to increase in the United States, with the number of suspicious-activity reports to the FBI in 2004 almost triple those in 2003, according to the bureau.

Also, 26 different states have significant mortgage problems, and the top 10 included California, said the FBI’s May Financial Crimes Report to the Public. The report gives statistics on a number of crimes, including mortgage fraud.

Based on existing investigations and mortgage fraud reporting, 80% of the fraud losses involve collaboration or collusion by industry insiders, the report concluded. Such forms of mortgage fraud involve falsely inflating the value of the property or issuing loans based on fictitious properties, among other things.

In 2003, 6,936 suspicious-activity reports were made to the FBI. The number zoomed to 17,127 in 2004, the bureau said.

The report noted that “mortgage fraud in the secondary market is often underreported. Therefore, the true level of mortgage fraud is largely unknown. The mortgage industry itself does not provide estimates on total industry fraud.”

Briefly

* Rates for 30-year fixed mortgages, after falling for five straight weeks, edged up last week to an average 5.77% from 5.75% the week before, according to Freddie Mac. Rates for 15-year fixed mortgages rose to an average 5.33% from 5.31%. The average for one-year adjustable-rate mortgages was 4.23%, up from 4.22%.

* Lenders may have a greater incentive to offer 40-year mortgages now that Fannie Mae plans to purchase more of these loans on the secondary market, according to Thomas Lund, acting executive vice president of single-family businesses at Fannie Mae.

From Times wire reports