Justice Department Now Tracking
Criminal Mortgage Fraud Cases

The federal government reports filing 151 criminal mortgage fraud prosecutions in the first ten months of FY 2008, according to Justice Department data just obtained by the Transactional Records Access Clearinghouse (TRAC).

Judicial District Prosecutions Filed
All 151
California, Central 9
California, South 10
Florida, Middle 4
Florida, South 69
Georgia, North 10
Mississippi, South 4
New York, South 11
Ohio, North 8
Pennsylvania, West 24
Vermont 2

This very focused enforcement information is the result of a new tracking program recently set up by federal prosecutors around the country to report on current federal efforts to criminally prosecute cases of mortgage fraud. Table 1 records criminal enforcement actions that federal prosecutors are now monitoring under the newly established mortgage fraud category. In the months to come, TRAC will be providing regular updates on every referral acted upon by each U.S. Attorney's Office and what the ultimate outcomes are. As a result of natural court delays, only 37 prosecutions of this type so far have been reported as being complete in the current fiscal year (see Table 2).

Given the broad troubles now confronting the economy of the United States, and the role that mortgage fraud may have played in these problems, the relatively small number of cases in this area is somewhat surprising. For example, during the same period U.S. attorney offices criminally prosecuted 554 individuals for simple drug possession, 399 cases for environmental wildlife protection and 405 for child pornography.

Judicial District Prosecutions Completed
All 37
California, Central 0
California, South 3
Florida, Middle 0
Florida, South 25
Georgia, North 6
Mississippi, South 0
New York, South 1
Ohio, North 2
Pennsylvania, West 0
Vermont 0

The Justice Department reported that the Federal Bureau of Investigation was the lead investigative agency for 71 of these new prosecutions — almost half (47 percent). The FDIC was second with 32 cases, or 21 percent of the total.

According to the Financial Crimes section of the FBI, mortgage fraud is one of several different kinds of white-collar crimes of special interest to the Bureau. The other areas are corporate crime, health care fraud, insurance fraud (non-health care related), securities and commodities fraud, identify theft and money laundering. To place the FBI activity for mortgage fraud into perspective, U.S. Attorney offices around the country during the first 10 months of FY 2008 credited the FBI with being the lead investigative agency for 31 corporate fraud cases, 221 health care fraud matters, 17 insurance fraud cases, 94 securities and commodities fraud prosecutions, 82 identity theft cases and 38 for money laundering.

The FBI says that each mortgage fraud scheme contains some type of "material misstatements, misrepresentation or omission relied upon by and underwriter or lender to fund, purchase or insure a loan."

No central repository collects all mortgage fraud enforcement actions and the true level of this fraud is unknown. But under a 1970 law, financial institutions are required to regularly file Suspicious Activity Reports (SARs) with the Treasury Department's Financial Crimes Enforcement Network (FINCEN) on a range of activities that may be legally questionable.

In a report posted in April 2008, FINCEN said it had received 52,868 SAR reports in FY 2007. This total was more than five times the 9,539 such reports the agency said it had received in FY 2003. It must be noted that a report on a possible suspicious activity does not mean a federal crime has been committed. In addition, various states have laws allowing them to police mortgage fraud matters.

The 151 federal mortgage fraud prosecutions so far reported for FY 2008 were clustered in only ten judicial districts, with Florida South (Miami) the most active (69) followed by Western Pennsylvania (Pittsburgh) where 26 prosecutions were noted.

The very recent FINCEN statistical report said that the SAR data indicated that Florida is among the states which appear to have serious mortgage fraud problems. Other states at the top of the FINCEN list are California, Georgia, Illinois, New York and Texas.

*Note: clicking on a state in Table 1 or Table 2 will link to more detailed information about each mortgage fraud case available through our subscription service in TRAC's data warehouse.