Filed under: Newspapers, Scandals
Earlier today, BloggingStocks’ Lita Epstein wrote about the rampant mortgage fraud that has played a big role in perpetrating the recent foreclosure surge and subprime meltdown. People have lied about their incomes and assets at an unprecedented rate on mortgage applications and now many of those homes are in foreclosure.
According to Ms. Epstein, “The FBI told the Journal that the percentage of white-collar agents and analysts devoted to prosecuting mortgage fraud is 28%. That’s four times the number working on those types of cases in 2003 when it was only 7%. Lenders must file Suspicious Activity Reports when they suspect fraud. The number of reports being filed is up by nearly 700% between 2000 and 2006. In 2003 there were 436 active mortgage fraud cases and in 2007 the case load is 1,210.”
One expert believes that half of foreclosures may be due to fraud.
Here’s what’s interesting: It seems likely that a big part of the run-up in housing values may also have been a result of fraud. Demand was inflated by fraudsters making bids on homes that they couldn’t afford — and lenders who were lending based on fraudulent misrepresentations.
Continue reading Fraud and bubbles: Like a horse and carriage
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