MBA Study Examines Fraud Committed Against Mortgage Lenders
|October 1, 2007|
|"Mortgage Fraud: Strengthening Federal and State Mortgage Fraud Prevention Efforts" [pdf]|
The Mortgage Bankers Association (MBA) released a new studfy - "Mortgage Fraud: Strengthening Federal and State Mortgage Fraud Prevention Efforts". The study is the next in a series of policy papers designed to inform and shape the debate surrounding important issues affecting the real estate finance industry. This paper takes a comprehensive look at the policy discussion surrounding fraud against lenders, a critical issue in today’s mortgage market.
“Last month President Bush reiterated his administration’s commitment to pursuing fraud and wrongdoing throughout the mortgage lending process,” said Jonathan L. Kempner, President and CEO of the MBA. “Whether it’s fraud for housing or the more serious fraud for profit, people are deceiving lenders at an alarming rate, and more must be done to combat this problem.”
The Federal Bureau of Investigation (FBI) has estimated that fraud cost mortgage lenders as much as $4.2 billion in 2006 alone. This growing trend is troubling for many reasons, but most significantly because fraud-related costs and losses incurred by lenders are ultimately passed on to their customers, increasing the cost of homeownership for all borrowers. The Financial Crimes Enforcement Network (FinCEN), a bureau under the U.S. Department of the Treasury has reported that the number of mortgage-related Suspicious Activity Reports (SARs) filed has increased an average of nearly 60 percent per year over the past four years.
MBA’s policy paper seeks to separate the issue of mortgage fraud from predatory lending and to provide policymakers with a roadmap to effectively combat the growing incidence of mortgage fraud. In the paper, MBA discourages adding to or modifying the already comprehensive list of federal fraud statutes and instead recommends that Congress increase resources available to law enforcement and help facilitate the coordination of federal and state law enforcement of financial crimes.
“We do not need more federal laws to combat fraud. Instead, we need a more coordinated effort and more resources to investigate and prosecute,” said Kempner. “In addition to being illegal and costly, we know that fraud has also contributed to the recent rise in delinquencies and foreclosures, and the industry and government must step up our anti-fraud efforts to help curtail these related problems.”