The FBI says the subprime mortgage crisis is feeding a booming business for fraudsters. The Bureau’s Subprime Mortgage Industry Fraud Initiative is investigating 14 corporations involved in subprime lending—including mortgage lenders and investment banks that bundle loans into securities sold to investors.
At the end of January, the FBI said it was investigating 1,200 open cases involving subprime lending, a 40% year-over-year increase. Many of these cases involve fraud for profit, where groups of straw buyers or realtors rig schemes to buy properties that are flipped or allowed to go into foreclosure. Suspicious Activity Reports (SARs), which were reviewed for potential mortgage fraud, grew from 3,000 in fiscal 2003 to 48,000 in fiscal 2007. SARs are on pace to top 60,000 in the current fiscal year.
More information and statistics on the FBI’s enforcement efforts in this area are available at www.fbi.gov.