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Recognizing the Signs
Mortgage fraud may include, but is not limited to:
- Foreclosure rescue schemes
- Loan modification schemes
- Illegal property flipping
- Builder bailout/condo conversion
- Equity skimming
- Silent second
- Home equity conversion mortgage
- Commercial real estate loans
- Air loans
Source: Mortgage Fraud Overview (Federal Bureau of Investigation)
Mortgage Fraud (Federal Bureau of Investigation, May 2009)
Mortgage Fraud Defined
Mortgage fraud comes in many different forms and can derive from any of the parties involved in the mortgage acquisition process—buyers, sellers, investors, property developers, appraisers, real estate agents, creditors, lenders, etc.—so it is important that all parties involved in the mortgage process recognize key signs of fraud and stay informed of the procedures for prevention. The articles below offer a starting point for understanding mortgage fraud.
Source: Mortgage Fraud Report 2010 (U.S. Federal Bureau of Investigation)
Impact of Mortgage Fraud
Amid Record-High Origination Volumes, Mortgage Fraud Risk Is Down – Here’s Why (Housing Wire, Nov. 4, 2020)
Insider Mortgage Fraud Charges Highlight Persistent Industry Risk (Nationalmortgagenews.com, Sep. 24, 2020) E
Mortgage Fraud Trends Report (CoreLogic, 2020)
Mortgage Fraud (United States Sentencing Commission, Nov. 2020)
Semiannual Report to Congress (Office of the Special Inspector General for the Troubled Asset Relief Program, Apr. 2020)
6 Types of Mortgage Fraud Are Becoming More Prevalent (REALTOR® Magazine, Sep. 17, 2018)
Mortgage Fraud Prevention
Lenders “Layer Up” With Extra Security Measures In 2021: Getting Ahead of The Next Wave of Mortgage Fraud Calls for Rock-Solid Systems with Several Protective Tools Deployed At Once. But That Only Goes So Far Without the Proper Employee Preparation (National Mortgage News, Nov. 2020) E
Coronavirus-related Fraud Prevention Tips and Resources (Federal Housing Finance Agency, Apr. 16, 2020)
Fraud Prevention (Federal Housing Finance Agency, Mar. 18, 2020)
Fraud Prevention and Best Practices (FreddieMac, 2021)
[PULSE] A New Lending Environment Will Bring New Mortgage Fraud Risks (Housing Wire, May 11, 2020)
Scammers Are Trying to Dupe Homeowners Who Need Help (REALTOR® Magazine, Mar. 27, 2020)
Mortgage Fraud Prevention (Fannie Mae, 2020)
Key Insights into Mortgage Fraud Risk (FreddieMac, Oct. 11, 2019)
Mortgage Fraud (United States Sentencing Commission, Sep. 2019)
Mortgage Closing Scams: How to Protect Yourself and Your Closing Funds (Consumer Financial Protection Bureau, Jun. 3, 2019)
Fraud Schemes and their Characteristics (Fannie Mae, Dec. 2018)
Don't Be A Victim Of Loan Fraud (U.S. Department of Housing and Urban Development, 2003)
Prevent Loan Scams (Department of Housing and Urban Development)
Reporting Mortgage Fraud in the United States
Preventing, Detecting, and Reporting Mortgage Fraud (Fannie Mae, Apr. 3, 2019)
The Federal Trade Commission (FTC)*
600 Pennsylvania Avenue, NW
Washington, D.C. 20580
- Filing a Complaint with the FTC - For complaints against companies, organizations, or business practices, click the link or call (877) FTC-HELP
- FTC Identity Theft site - For complaints regarding identity theft, click the link or call (877) ID-THEFT
- Para Espanol?
*Note: The FTC does not resolve individual consumer problems. The FTC does investigate mortgage fraud with the goal of bringing it to the justice department for legal action; your input will aid the FTC in this process.
U.S. Federal Bureau of Investigation (FBI)
935 Pennsylvania Avenue, NW
Washington, D.C. 20535
- Review the FBI's latest updates and details on Mortgage Fraud issues.
- Locate an FBI office in your area to report fraud or call the toll-free number 1-800-CALL-FBI (1-800-225-5324). You can also fill out an online FBI Tips and Public Leads Form.
Financial Fraud Enforcement Task Force—Established in November of 2009 by President Obama, the Financial Fraud Enforcement Task Force is designed with the intent to hold accountable "those who helped bring about the last financial crisis, and to prevent another crisis from happening."
PreventLoanScams.org—The Lawyers' Committee for Civil Rights Under the Law is a U.S.-based nonprofit organization formed in 1963. "The principle mission of the Lawyers' Committee is to secure, through the rule of law, equal justice under law. As a leader of the Loan Modification Scam Prevention Network (Network), the Lawyers' Committee administers the www.preventloanscams.org website, and leads the enforcement and data collection efforts for the Network."
- If you think you've been scammed or approached by a company or individual promising to help you with your foreclosure, report it today or call 1-888-995-HOPE.
The Office for Victims of Crime (OVC) is a federal office within the U.S. Department of Justice that "provides federal funds to support victim assistance and compensation programs around the country and advocates for the fair treatment of crime victims."
- Access a searchable online directory of crime victims' services.
Better Business Bureau is NOT affiliated with the U.S. government. It is operated by the Council of Better Business Bureaus Inc. and allows businesses and organizations to join as members. The mission of the Better Business Bureau is "to successfully resolve complaints involving buyers and sellers in a fair and timely fashion."
SIGTARP—Office of the Special Inspector General for the Troubled Asset Relief Program (TARP)
SIGTARP is “a sophisticated, white-collar law enforcement agency, was established by Congress in 2008 to prevent fraud, waste, and abuse linked to the $700 billion Troubled Asset Relief Program (TARP) […] SIGTARP conducts criminal and civil investigations related to TARP, audits how TARP assets are managed, and recommends ways to improve the program.”
eBooks & Other Resources
The following eBooks and digital audiobooks are available to NAR members:
Busted: Life Inside the Great Mortgage Meltdown (Audiobook)
Confessions of a Subprime Lender (Kindle, eBook)
Fraud Prevention for Commercial Real Estate Valuation (Kindle, eBook)
The New Rules for Mortgages (Kindle, eBook)
Books, Videos, Research Reports & More
The resources below are available for loan through Member Support. Up to three books, tapes, CDs and/or DVDs can be borrowed for 30 days from the Library for a nominal fee of $10. Call Member Support at 800-874-6500 for assistance.
An American Epidemic: Mortgage Fraud- a Serious Business (New York, NY : iUniverse, Inc., 2005)
Financial Shock: A 360 Degree Look at the Subprime Mortgage Implosion, and How to Avoid the Next Financial Crisis (Upper Saddle River, NJ: FT Press, 2009)
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