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US plagued by mortgage scams

Jaimie Kanwar

US mortgage fraud convictions have doubled in the past year, according to the MBA...

The FBI expects a growth in foreclosure scams as the crisis over substandard, high-interest home loans escalates. Foreclosure rates for these mortgages, known as subprime loans, are at historic highs, according to surveys by the Mortgage Bankers Association and Government records.

The FBI opened 1,210 mortgage fraud cases in fiscal year 2007, nearly triple the number of new cases in 2003. Convictions more than doubled from 123 in the 2006 fiscal year to 260 in 2007.

"We expect that number to increase again in 2008," says FBI financial crimes Section Chief Sharon Ormsby. Low interest rates, rising home values and lax lending standards "created the perfect storm of lending fraud," she says.