References
NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require the member's nar.realtor login.
Impact of Mortgage Fraud
Mortgage Fraud Risk Is Increasing Amid Slow Real Estate Market (HousingWire, Sep. 12, 2022)
“In the second quarter of 2022, about 1 in 131 mortgage applications contained fraud while 1 in 120 applications were fraudulent in the same period last year. The decline is partially due to a different scoring model in the first quarter of 2022 but higher risks were recorded for income and property frauds, according to a mortgage fraud report published by CoreLogic.”
Mortgage Fraud Costs Banks More Than Nonbanks (National Mortgage News, May 17, 2022)
“Real estate scams have the highest impact on depository mortgage originators, costing them $5.34 for every $1 of fraudulent transactions, a study from LexisNexis Risk Solutions revealed.”
Mortgage Fraud on the Rise, Purchase Applications Vulnerable (Mortgage News Daily, Oct. 29, 2021)
“Fraud was most prevalent in purchase mortgage applications, one occurrence in every 90 applications, and a 40 percent year-over-year increase. Fraud was indicated in one in every 169 refinance applications, up 19.4 percent on an annual basis.”
Mortgage Fraud (United States Sentencing Commission)
In fiscal year 2020, there were 47 mortgage fraud offenders sentenced in the federal system. The number of mortgage fraud offenders has decreased by 86.1% since fiscal year 2016.
Mortgage Fraud Prevention
Selling Guide: What Are Common Red Flags That May Indicate Mortgage Fraud? (Fannie Mae, Apr. 5, 2023)
“Inconsistencies in the loan file are often a tip-off that the file contains misrepresentations. The presence of one or more red flags in a file does not necessarily mean that there was fraudulent intent. However, several red flags in a file may signal a fraudulent transaction.”
Mortgage Fraud: What You Need to Know (ROCKET Mortgage, Mar. 14, 2023)
This article explores mortgage fraud, schemes frequented by scammers, and how to avoid getting caught up in them.
Fraud Prevention and Best Practices (Freddie Mac, 2023)
“Be aware of these types of scams and schemes. Sad to say, fraudsters are creative and energetic. So if you’re in the mortgage industry, you need to stay on top of what they’re up to – and what they’re planning next.”
Fraud Prevention (Federal Housing Finance Agency, 2023)
“Potential homebuyers, homeowners, distressed homeowners, and individuals employed in the mortgage industry, in particular, should be aware of mortgage fraud schemes perpetrated in connection with home loan origination and throughout the life of a mortgage. Education is key to identify, detect, and prevent mortgage fraud. The information [in this article] can assist mortgage market participants in recognizing common mortgage fraud schemes.”
Mortgage Wire Fraud: What It is and How to Prevent It (LendingTree, Dec. 5, 2022)
- Beware of last-minute changes
- Call before you send a wire
- Get contact information on day one
- Consider setting passcodes
- Know the closing process
- Don’t discuss finances via email
- Verify the completed transactions
Mortgage Scams (FDIC, Aug. 22, 2022)
“A fairly new and dangerous threat has arisen for homeowners who have fallen behind on their mortgage payments and may be at risk of foreclosure – opportunistic companies. They often refer to themselves as a “foreclosure consultant” or “mortgage consultant,” and market themselves as a "foreclosure service", "foreclosure rescue agency" or "loan modification company." They count on homeowners being vulnerable and desperate.”
Prevent Loan Scams (U.S. Department of Housing and Urban Development)
To stop scammers, HUD has merged the efforts of NeighborWorks America, the Lawyers’ Committee for Civil Rights Under Law, and the Homeowners’ HOPE Hotline at 888-995-HOPE to provide an “early warning system” that empowers homeowners to protect themselves and their homes, while providing the tools necessary to take action so that law enforcement agencies across the country can put a stop to these unacceptable practices.
Reporting Mortgage Fraud in the United States
The Federal Trade Commission (FTC)*
600 Pennsylvania Avenue, NW
Washington, D.C. 20580
Filing a Complaint with the FTC - For complaints against companies, organizations, or business practices, click the link or call (877) FTC-HELP
FTC Identity Theft site - For complaints regarding identity theft, click the link or call (877) ID-THEFT
*Note: The FTC does not resolve individual consumer problems. The FTC does investigate mortgage fraud with the goal of bringing it to the justice department for legal action; your input will aid the FTC in this process.
U.S. Federal Bureau of Investigation (FBI)
935 Pennsylvania Avenue, NW
Washington, D.C. 20535
Phone: 202-324-3000
Locate an FBI office in your area to report fraud or call the toll-free number 1-800-CALL-FBI (1-800-225-5324). You can also fill out an online FBI Tips and Public Leads Form.
Useful Websites
Financial Fraud Enforcement Task Force
Established in November of 2009 by President Obama, the Financial Fraud Enforcement Task Force is designed with the intent to hold accountable "those who helped bring about the last financial crisis, and to prevent another crisis from happening."
The Lawyers' Committee for Civil Rights Under the Law is a U.S.-based nonprofit organization formed in 1963. "The principle mission of the Lawyers' Committee is to secure, through the rule of law, equal justice under law. As a leader of the Loan Modification Scam Prevention Network (Network), the Lawyers' Committee administers the www.preventloanscams.org website, and leads the enforcement and data collection efforts for the Network."
- If you think you've been scammed or approached by a company or individual promising to help you with your foreclosure, report it today or call 1-888-995-HOPE.
The Office for Victims of Crime (OVC)
A federal office within the U.S. Department of Justice that "provides federal funds to support victim assistance and compensation programs around the country and advocates for the fair treatment of crime victims."
- Access a searchable online directory of crime victims' services.
NOTaffiliated with the U.S. government. It is operated by the Council of Better Business Bureaus Inc. and allows businesses and organizations to join as members. The mission of the Better Business Bureau is "to successfully resolve complaints involving buyers and sellers in a fair and timely fashion."
Office of the Special Inspector General for the Troubled Asset Relief Program (TARP)
SIGTARP is “a sophisticated, white-collar law enforcement agency, was established by Congress in 2008 to prevent fraud, waste, and abuse linked to the $700 billion Troubled Asset Relief Program (TARP) […] SIGTARP conducts criminal and civil investigations related to TARP, audits how TARP assets are managed, and recommends ways to improve the program.”
eBooks &Other Resources
The following eBooks and digital audiobooks are available to NARmembers:
Busted: Life Inside the Great Mortgage Meltdown (Audiobook)
Confessions of a Subprime Lender (eBook)
Fraud Prevention for Commercial Real Estate Valuation (eBook)
Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You (eBook)
The New Rules for Mortgages (eBook)
As a REALTOR® member benefit, the following resources and more are available for loan through the NAR Library. Items will be mailed directly to you or made available for pickup at the REALTOR® Building in Chicago.
An American Epidemic: Mortgage Fraud- a Serious Business (New York, NY : iUniverse, Inc., 2005)
Financial Shock: A 360 Degree Look at the Subprime Mortgage Implosion, and How to Avoid the Next Financial Crisis (Upper Saddle River, NJ: FTPress, 2009)
Have an idea for a real estate topic? Send us your suggestions.
The inclusion of links on this page does not imply endorsem*nt by the National Association of REALTORS®. NAR makes no representations about whether the content of any external sites which may be linked in this page complies with state or federal laws or regulations or with applicable NAR policies. These links are provided for your convenience only and you rely on them at your own risk.
