Friday, June 25, 2010
Tuesday, June 22, 2010
Mortgage Fraud is on the Rise
A wake of fraudulent activity sweeps across America and capsizes the housing market. Its undertow carelessly sucks the life out from middle and lower classes, leaving many in ruins. Mortgage fraud is not a new face to American society but in our current economy it is drowning the survivors. According to the Federal Bureau of Investigation (FBI) mortgage fraud is defined as an “intentional misstatement, misrepresentation, or omission by an applicant or other interested parties, relied on by a lender or underwriter to provide funding for, to purchase, or to insure a mortgage loan”. The FBI separates mortgage fraud into two categories: fraud for property/housing and fraud for profit. They define fraud for property housing as the “misrepresentations by the applicant for the purpose of purchasing a property for a primary residence… [and] usually involves a single loan…[where] applicants may embellish income and conceal debt [with the] intent to repay the loan”. Fraud for profit “…involves multiple loans and elaborate schemes perpetrated to gain illicit proceeds from property sales”. Law enforcement agencies are working with industry entities all across the United States to crack down on both of these forms of fraud. They are finding fraud for profit to be the most victimizing trend in the housing market.
According to the FBI the increase in mortgage fraud stems from the fact that no single agency holds the responsibility of monitoring mortgage fraud. Our nation is currently running the largest collective enforcement ever brought to bear mortgage fraud known as Operation Stolen Dreams, according to the article “Mortgage Fraud and News”. In the article we are told that “… mortgage fraud impacts us in a personal way: it directly affects our friends, families, neighbors, coworkers, and communities.” The impacts of mortgage fraud can be seen in the growing amount of people who have been caught in the act of, or as an accomplice, to these white collar perpetrators. Most of these fraudsters have participated in signing people up for mortgages that they should have never qualified for by fraudulently altering the amount of income that the victim grosses annually and giving them non-fixed interest rates. The victim then has to file for bankruptcy or file for a short sale because of the inflation of interest on their mortgage. This causes homes to be outbid by mortgage companies or their accomplices, known as straw buyers, who fix up the houses and turn them back to the market for profit.
As a nation we must question how long these scandals have been in practice and how many people have unknowingly fallen victim to this crime. The FBI reports that we cannot rely solely on numbers to be an accurate determinate of the money lost or the people victimized by mortgage fraud. We can, however, establish a “direct correlation between fraud and the distressed real estate market”. According to Stephanie Douglas, a special agent of the FBI, “ [the devastation] from mortgage fraud [has] resulted in widespread foreclosures, bankruptcies, and ruined lives; it [has shaken] our national economy to the core; and it severely damaged some of the world’s largest financial institutions”. Out of greed, mortgage companies that were once reputable now have corruption in their seams. Even if they survive the bust of the tainted individuals within their company, their actions have already instilled a moral panic all throughout the nation; everyone has developed awareness of the way they have operated. The housing market has fallen drastically and over the past four years we have seen a rapid decrease in the values of homes partially due to the decay of the economy and partially because people are unable afford their homes with the increasing interest rates. People who were looking forward to owning a home because of the low prices, now are afraid to invest because they have seen what damage it has done to their friends and family who have lost their homes, filed bankruptcy, and now don’t have enough credit to even qualify for an apartment. Mortgage fraud is not a new innovation but due to the collective efforts involving the FBI we are now becoming more conscious of the issue nationwide.
Every year we see an increase in mortgage fraud. According to the FBI, in 2009 there were over 1,500 reported cases (compared to 136 cases reported in 2004) and out of those cases, 822 were indicted which resulted in 494 convictions. According to the FBI’s article on “Mortgage Fraud” the first alarming signs came in December of 2006 “as payment defaults on mortgage loans were becoming more pronounced… the real estate market began declining… delinquencies and foreclosure rates kept increasing”. The mortgage crisis began in 2006 and continues to grow worse in 2010. To date we see ten times the amount of cases reported than in 2004 and we are only halfway through the year. The New York Times article “US Reveals Mortgage Fraud Crackdown” reports that so far under Operation Stolen Dreams there have been over 1,215 people charged with mortgage fraud and an estimated $2.3 billion in damages. According to the Department of Justice, in the last three and a half months there have been 485 arrests resulting in 336 convictions with a recovery of over $147 million.
The increase in mortgage fraud is in part due to failing economy as people are looking for a life preserver to stay afloat through these hard times, but in the same respect these crimes are attributing to our nations state of devastation. Not only is the amount of mortgage fraud increasing but so is our nation’s battle to indict and convict those that are contributing to this problem of fraud. We have multiple entities such as the FBI who are working hard to “compile data on mortgage fraud through suspicious activity reports (SARs) filed by federally-insured financial institutions, reports received from the Department of Housing and Urban Development-Office of the Inspector General (HUD-OIG), and complaints received from the public and mortgage industry at large”. As a nation it is important that we continue to report mortgage fraud to the FBI so that it may immediately be investigated and to prevent our fellow citizens from being victimized. Reports do not necessarily guarantee a conviction or restitution for such heinous acts, but work effectively to deploying the amount of schemes that are continuing to formulate and further our economic state into ruins.
Works Cited
Administration. (2010, June 23). "Operation Stolen Dreams" Targeting Mortgage Fraudsters in California. Retrieved June 24, 2010, from Mortgage Fraud and News: http://mortgagefraudandnews.com/2010/06/23/%e2%80%9coperation-stolen-dreams%e2%80%9d-targeting-mortgage-fraudsters-in-california/
FBI. (2010, March). Retrieved June 24, 2010, from Mortgage Fraud Overview: http://www.fbi.gov/hq/mortgage_fraud.htm
FBI. (2008). Financial Crime Reports to the Public Fiscal Year 2008. Washington D.C.: US Government Department of Justice.
Reuters. (2010, June 17). US Reveals Mortgage Fraud Crackdown. Retrieved June 24, 2010, from New York Times: http://www.nytimes.com/2010/06/18/business/18fraud.html?scp=2&sq=mortgage%20fraud&st=cse
Ritter, K. (2010, June 25). 'Operation Stolen Dreams': DOJ Arrests Nearly 500 In Mortgage Fraud Crackdown. Retrieved June 25, 2010, from The Huffington Post: http://www.huffingtonpost.com/2010/06/17/operation-stolen-dreams-d_n_615798.html
According to the FBI the increase in mortgage fraud stems from the fact that no single agency holds the responsibility of monitoring mortgage fraud. Our nation is currently running the largest collective enforcement ever brought to bear mortgage fraud known as Operation Stolen Dreams, according to the article “Mortgage Fraud and News”. In the article we are told that “… mortgage fraud impacts us in a personal way: it directly affects our friends, families, neighbors, coworkers, and communities.” The impacts of mortgage fraud can be seen in the growing amount of people who have been caught in the act of, or as an accomplice, to these white collar perpetrators. Most of these fraudsters have participated in signing people up for mortgages that they should have never qualified for by fraudulently altering the amount of income that the victim grosses annually and giving them non-fixed interest rates. The victim then has to file for bankruptcy or file for a short sale because of the inflation of interest on their mortgage. This causes homes to be outbid by mortgage companies or their accomplices, known as straw buyers, who fix up the houses and turn them back to the market for profit.
As a nation we must question how long these scandals have been in practice and how many people have unknowingly fallen victim to this crime. The FBI reports that we cannot rely solely on numbers to be an accurate determinate of the money lost or the people victimized by mortgage fraud. We can, however, establish a “direct correlation between fraud and the distressed real estate market”. According to Stephanie Douglas, a special agent of the FBI, “ [the devastation] from mortgage fraud [has] resulted in widespread foreclosures, bankruptcies, and ruined lives; it [has shaken] our national economy to the core; and it severely damaged some of the world’s largest financial institutions”. Out of greed, mortgage companies that were once reputable now have corruption in their seams. Even if they survive the bust of the tainted individuals within their company, their actions have already instilled a moral panic all throughout the nation; everyone has developed awareness of the way they have operated. The housing market has fallen drastically and over the past four years we have seen a rapid decrease in the values of homes partially due to the decay of the economy and partially because people are unable afford their homes with the increasing interest rates. People who were looking forward to owning a home because of the low prices, now are afraid to invest because they have seen what damage it has done to their friends and family who have lost their homes, filed bankruptcy, and now don’t have enough credit to even qualify for an apartment. Mortgage fraud is not a new innovation but due to the collective efforts involving the FBI we are now becoming more conscious of the issue nationwide.
Every year we see an increase in mortgage fraud. According to the FBI, in 2009 there were over 1,500 reported cases (compared to 136 cases reported in 2004) and out of those cases, 822 were indicted which resulted in 494 convictions. According to the FBI’s article on “Mortgage Fraud” the first alarming signs came in December of 2006 “as payment defaults on mortgage loans were becoming more pronounced… the real estate market began declining… delinquencies and foreclosure rates kept increasing”. The mortgage crisis began in 2006 and continues to grow worse in 2010. To date we see ten times the amount of cases reported than in 2004 and we are only halfway through the year. The New York Times article “US Reveals Mortgage Fraud Crackdown” reports that so far under Operation Stolen Dreams there have been over 1,215 people charged with mortgage fraud and an estimated $2.3 billion in damages. According to the Department of Justice, in the last three and a half months there have been 485 arrests resulting in 336 convictions with a recovery of over $147 million.
The increase in mortgage fraud is in part due to failing economy as people are looking for a life preserver to stay afloat through these hard times, but in the same respect these crimes are attributing to our nations state of devastation. Not only is the amount of mortgage fraud increasing but so is our nation’s battle to indict and convict those that are contributing to this problem of fraud. We have multiple entities such as the FBI who are working hard to “compile data on mortgage fraud through suspicious activity reports (SARs) filed by federally-insured financial institutions, reports received from the Department of Housing and Urban Development-Office of the Inspector General (HUD-OIG), and complaints received from the public and mortgage industry at large”. As a nation it is important that we continue to report mortgage fraud to the FBI so that it may immediately be investigated and to prevent our fellow citizens from being victimized. Reports do not necessarily guarantee a conviction or restitution for such heinous acts, but work effectively to deploying the amount of schemes that are continuing to formulate and further our economic state into ruins.
Works Cited
Administration. (2010, June 23). "Operation Stolen Dreams" Targeting Mortgage Fraudsters in California. Retrieved June 24, 2010, from Mortgage Fraud and News: http://mortgagefraudandnews.com/2010/06/23/%e2%80%9coperation-stolen-dreams%e2%80%9d-targeting-mortgage-fraudsters-in-california/
FBI. (2010, March). Retrieved June 24, 2010, from Mortgage Fraud Overview: http://www.fbi.gov/hq/mortgage_fraud.htm
FBI. (2008). Financial Crime Reports to the Public Fiscal Year 2008. Washington D.C.: US Government Department of Justice.
Reuters. (2010, June 17). US Reveals Mortgage Fraud Crackdown. Retrieved June 24, 2010, from New York Times: http://www.nytimes.com/2010/06/18/business/18fraud.html?scp=2&sq=mortgage%20fraud&st=cse
Ritter, K. (2010, June 25). 'Operation Stolen Dreams': DOJ Arrests Nearly 500 In Mortgage Fraud Crackdown. Retrieved June 25, 2010, from The Huffington Post: http://www.huffingtonpost.com/2010/06/17/operation-stolen-dreams-d_n_615798.html
Wednesday, June 16, 2010
The Theory Behind White Collar Crime
What is the difference between bank robbery and mortgage fraud? According to the New York Times piece, “Prosecutions Lag as N.Y. Foreclosure Frauds Surge,” bank robbers average less than 2K with a 75 percent risk of being caught and prosecuted while mortgage fraud personnel walk away with hundreds of thousands of dollars and run little risk of being caught. This illustrates the allure of white collar crime.
The term white collar crime was coined by sociologist, Edwin Sutherland in 1939 and explained as “crime committed by a person of respectability and high social status in the course of his occupation.” According to Sutherland, this kind of crime is the most dangerous type to face the modern world. Although it cannot always be proven, white collar crime appears to be a root of today's economic trouble. The reason why this cannot be tested is that the Federal Bureau of Investigations (FBI) only holds data that is reported to the Uniform Crime Reports (UCR). Many corporations are: not aware of, do not prosecute, or report offenses making it hard to have accurate documentation.
Today we have multiple definitions for this term, but they all fit into the FBI commonly prosecuted fraud. Although the theory behind this classification of crime has not changed the basic orientationsof white collar crime: “...white-collar crime by the type of offender (e.g., high socio-economic status and/or occupation of trust); those that define it in terms of the type of offense (e.g., economic crime); and...the organizational culture rather than the offender or offense”. Currently, the FBI prosecutes according to the type of offense. They have chosen to redefine Sutherland’s theory as, “…those illegal acts which are characterized by deceit, concealment, or violation of trust and which are not dependent upon the application or threat of physical force or violence”.
According to the FBI’s report on white collar crime they believe that “individuals and organizations commit these acts to obtain money, property or services; to avoid the payment or loss of money or services; or to secure personal or business advantage”. As a society, we are seeing more of this type of crime publicized. This is in part, due to the fact that we are seeing more and more educated people as victims of white collar crimes. These crimes go unnoticed until they reach a multitude of people and at that point they become a kind of robbery that has been redefined as white collar crime.
Works Cited
Barnett, C. (1999). The Measurement of White Collar Crime Using Uniform Crime Reporting (UCR) Data. Retrieved June 15, 2010, from Criminal Justice Information Services (CJIS) Division : http://www.fbi.gov/ucr/whitecollarforweb.pdf
LII/ Legal Information Institute. (n.d.). Retrieved June 15, 2010, from Cornell University Law School: http://topics.law.cornell.edu/wex/white-collar_crime
Powell, M. (2010, May 30). Blacks in Memphis Lose Decades of Economic Gains. Retrieved June 15, 2010, from The New York Times: http://www.nytimes.com/2010/05/31/business/economy/31memphis.html?pagewanted=1
Powell, M. (2009, April 14). Prosecutions Lag as N.Y. Foreclosure Frauds Surge . Retrieved June 14, 2010, from The New York Times: http://www.nytimes.com/2009/04/15/nyregion/15prosecutors.html?_r=2&fta=y
The term white collar crime was coined by sociologist, Edwin Sutherland in 1939 and explained as “crime committed by a person of respectability and high social status in the course of his occupation.” According to Sutherland, this kind of crime is the most dangerous type to face the modern world. Although it cannot always be proven, white collar crime appears to be a root of today's economic trouble. The reason why this cannot be tested is that the Federal Bureau of Investigations (FBI) only holds data that is reported to the Uniform Crime Reports (UCR). Many corporations are: not aware of, do not prosecute, or report offenses making it hard to have accurate documentation.
Today we have multiple definitions for this term, but they all fit into the FBI commonly prosecuted fraud. Although the theory behind this classification of crime has not changed the basic orientationsof white collar crime: “...white-collar crime by the type of offender (e.g., high socio-economic status and/or occupation of trust); those that define it in terms of the type of offense (e.g., economic crime); and...the organizational culture rather than the offender or offense”. Currently, the FBI prosecutes according to the type of offense. They have chosen to redefine Sutherland’s theory as, “…those illegal acts which are characterized by deceit, concealment, or violation of trust and which are not dependent upon the application or threat of physical force or violence”.
According to the FBI’s report on white collar crime they believe that “individuals and organizations commit these acts to obtain money, property or services; to avoid the payment or loss of money or services; or to secure personal or business advantage”. As a society, we are seeing more of this type of crime publicized. This is in part, due to the fact that we are seeing more and more educated people as victims of white collar crimes. These crimes go unnoticed until they reach a multitude of people and at that point they become a kind of robbery that has been redefined as white collar crime.
Works Cited
Barnett, C. (1999). The Measurement of White Collar Crime Using Uniform Crime Reporting (UCR) Data. Retrieved June 15, 2010, from Criminal Justice Information Services (CJIS) Division : http://www.fbi.gov/ucr/whitecollarforweb.pdf
LII/ Legal Information Institute. (n.d.). Retrieved June 15, 2010, from Cornell University Law School: http://topics.law.cornell.edu/wex/white-collar_crime
Powell, M. (2010, May 30). Blacks in Memphis Lose Decades of Economic Gains. Retrieved June 15, 2010, from The New York Times: http://www.nytimes.com/2010/05/31/business/economy/31memphis.html?pagewanted=1
Powell, M. (2009, April 14). Prosecutions Lag as N.Y. Foreclosure Frauds Surge . Retrieved June 14, 2010, from The New York Times: http://www.nytimes.com/2009/04/15/nyregion/15prosecutors.html?_r=2&fta=y
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