FBI: L.A. leads in mortgage fraud

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The FBI’s annual mortgage fraud review says Los Angeles leads the nation in mortgage fraud, measured by reports from the agency’s field offices.

The Los Angeles field office received 9,971 ‘suspicious activity reports’ in 2008; second-place Miami had 5,155. The report says fraud schemes include builders offering secret incentives to home buyers, such as falsely inflating a purchase price to make it appear as if a buyer has made a down payment when none was made. If the home forecloses, there is no home equity for the lender to recover.

Other schemes the report identifies are scams in which a group uses a straw buyer to intentionally default on a mortgage, then buys the property at a discount from the lender through a short sale; and foreclosure rescue schemes in which perpetrators offer to help a borrower in foreclosure and surreptitiously take over the deed to the property.

The report is a broad, but not very deep, overview of the scope of mortgage fraud. The FBI acknowledges that its findings are drawn from multiple sources, including local police, other government agencies, private consultants and trade groups, and that there are inconsistencies in the ways the groups gather and report data.

-- Peter Y. Hong