Today http://www.reuters.com/article/bondsNews/idUSN0751853920090707 the FBI reports that “insiders” in the mortgage lending industry are frequently engaging in mortgage fraud. And with the Obama’s infusion of cash to assist the ailing industury, its the taxpayers who will be footing the bill. The FBI has an interesting site which defines the white collar crime they fight see http://www.fbi.gov/publications/financial/fcs_report052005/fcs_report052005.htm
The increase in mortgage fraud is up a full 36 % http://www.mortgagefraud.org/ which indicates the industry similar to Wall Street is not regulated with enough policing to deter the behavior. Mortgage Fraud is generally a misrepresentation of material facts in the purchase of real estate ( employment, income job status, credit score, past credit history, assests) and or an omission in these facts. Frequently persons in the fraud business have allies such as appraisers who falsify the value of the property. ( some cases with false pictures of the premiese which turns out to be burnt out or gutted and worthless.) See http://en.wikipedia.org/wiki/Mortgage_fraud
Today’s Wall Street Journal http://online.wsj.com/article/SB124631486277570583.html in an Op-Ed reports that many of the housing and mortgage woes are also the result of declining prices and no recourse loans, which allow consumer’s to walk away from a mortgage with ease and rationality when the value of the asset drops below the market value. Fraud is a component of this as mortgage brokers often fabricated the assets and credit history of a borrower to induce the lender to make a loan. I found one blogger who actually covers this topic full time http://www.mortgagefraudblog.com/ and it’s amazing all the scams, identity theft and fraud that is ongoing.