The Wall Street Journal reported that accounts of mortgage fraud have now reached record levels. Mortgage fraud is a term used to describe a criminal act where one misrepresents or omits information on a mortgage loan application to obtain a loan or to obtain a loan for a larger amount than if the lender had known the truth. The misrepresentation or omission typically relates to the property or to the borrower. These misrepresentations come in the form of inflated appraisals, false or stolen identities, false loan applications, false reporting of income, false reporting of employment, fraud for profit or straw buyers, and multiple loans obtained against the same property, among other schemes.
Since 2007, mortgage fraud on the buyer level has increasingly been prosecuted by the federal government and the FBI has increased its agent and analyst manpower in mortgage fraud cases from 120 agents in 2007 to 300 agents in 2009. In September 2009, the FBI established the Financial Intelligence Center (FIC) to analyze data and financial databases and to create “mortgage fraud targeting packages.” Since 2009, the FBI and DOJ have specifically targeted Florida in investigating and prosecuting mortgage fraud, with over 100 people federally indicted for mortgage fraud in Florida alone since 2009 and over 1,200 defendants indicted nationwide.
Recently, in Palm Beach County, a number of people have been indicted for mortgage fraud in the Wellington community of Versailles. The two most recent indictments occurred at the end of April and they joined twenty-four other people who were previously indicted for mortgage fraud arising out of the Versailles development. All of these individuals are alleged to have recruited false buyers, inflated the home values in the mortgage documents, and pocketed the difference between the actual sale price and the mortgage value.