Becoming a whistleblower, and reporting mortgage fraud, is a way to help remedy the enormous misdeeds that led to the financial crisis. Mortgage fraud generally involves a material misstatement, misrepresentation or omission relied upon by an underwriter, or lender, to fund, purchase or insure a loan. Participants in various mortgage fraud schemes can include appraisers, accountants, attorneys, real estate brokers, mortgage underwriters and processors, title company employees, mortgage brokers, loan originators and other mortgage professionals.
The FBI, IRS and other federal law enforcement agencies have formed Operation Malicious Mortgage, which is a nationwide initiative targeted at reducing mortgage fraud. The frenzied real estate market prior to its recent implosion was rife with fraud and abuse, which now has become vividly clear. The government’s role in the real estate market, through the Department of Housing & Urban Development and its Federal Housing Administration, results in much of the mortgage fraud that has occurred being a fraud on the government as well.
The Fraud Enforcement and Recovery Act of 2009 has made it illegal to make false statements on mortgage applications and appraisals, while expanding the definition of “financial institution” to ensure it includes mortgage lending businesses. When the government ends up insuring mortgages, based on fraudulent information, or otherwise being responsible as a guarantor on mortgages that were fraudulently transacted in any way, then the False Claims Act provides a means of recouping those funds.
Mortgage fraud settlements include:
ABN Amro Agrees to $41 Million Settlement
Settled allegations that it had falsely certified that 28,097 mortgages had been underwritten in compliance with Department of Housing and Urban Development requirements.
“… the FBI reported that an “epidemic” of mortgage fraud is coming to light after the housing boom. HUD officials said that other firms are also under investigation for lending improprieties.”
National Home Builder and Mortgage Lender Pays $53 Million
$53 million settlement resolves allegations that Beazer Mortgage Corp. was involved in fraudulent mortgage origination activities in connection with federally insured mortgages.
“This action shows that the Administration is serious about making the housing market safe from mortgage fraud and will crackdown on those who violate the trust of American homebuyers.”