Daily Real Estate News  |  October 29, 2005  |   FBI Needs Your Help in Fighting Mortgage Fraud As the real estate market has soared in recent years, so has mortgage fraud. And the FBI is calling on real estate professionals to do something about it. James H. (Chip) Burrus Jr., deputy assistant director of the FBI Criminal Division’s National Crimes branch, on Friday urged practitioners to call their local FBI office if they’re aware of illegal activities in their market. Ask to speak with the white collar crime squad, he said. “All of you know who the bad apples are in your community,” Burrus said. “It’s important to report them. We have to get ahead of this before it becomes a huge crisis.” Some 721 cases of mortgage fraud are pending in the United States this year, up from 436 in 2003. The top five hottest states for this type of fraud per capita are Georgia, Nevada, Florida, South Carolina, and Utah. The FBI cares most about cracking down on “fraud for profit”—schemes that involve many loan transactions and a wide web of participants—rather than on buyers who fudge their income or debt so they can qualify for a mortgage, Burrus said. Profit schemes account for roughly 80 percent of all cases and typically involve inflated appraisals, “air loans” on homes that don’t exist, undisclosed second mortgages, and foreclosures, he said. Mortgage lenders, real estate salespeople, and appraisers are usually involved. What's the FBI doing about it? Developing sources within the real estate industry, making arrests that lead to more information, and most important, educating the public to spot and report fraud. To accomplish that task, help from brokers and salespeople is essential, Burrus said. “We simply can’t do it without you.” If you’d like to hold an educational workshop in your area, contact your local FBI office for help, Burrus said. Real estate practitioners who attended the mortgage fraud session said the problem is widespread in their area. “It’s everywhere,” said Joan Kuptz, broker-owner of RE/MAX Advantage in Las Vegas. “We see a new scheme every day.” Inflated appraisals are driving up home prices artificially, making it harder for buyers to afford a home. Some homebuilders add to the problem, pricing new construction above what real estate practitioners consider a fair market price, attendees said. Other attendees discussed what they believe is mortgage fraud in their markets and offered possible solutions, such as the need for independent appraisers who aren’t affiliated with buyers or lenders, and for mortgage originators to be licensed. —By Kelly Quigley for REALTORŪ Magazine Online