FBI: Minnesota ranks high on mortgage fraud

A report released this week by the Federal Bureau of Investigation found that Minnesota ranked in the top fifteen states for mortgage fraud claims in 2008 and in the top ten on a couple of measure. Specifically, data from the Financial Crimes Enforcement Network found Minneapolis FBI field offices ranked 9th in the number of Suspicious Activity Reports (SARs) related to mortgage fraud. And data from Fannie Mae’s reviews of mortgage loan “misrepresentations” put Minnesota at 7th in total fraud cases out of the 50 states.

A combination of aggregate data from eight different mortgage fraud tracking organizations put Minnesota at 13th overall for mortgage fraud. The top 15 states were California, Florida, Georgia, Illinois, Michigan, Arizona, Texas, Maryland, Missouri, New Jersey, New York, Ohio, Colorado, Nevada, Minnesota, Rhode Island, the District of Columbia and Massachusetts.

The FBI report said that fraud cases increased in 2008 as mortgage lenders tried to maintain their “high standard of living” following the disastrous collapse of housing bubble.

Mortgage fraud trends in 2008 reflected the overall downturn in the US economy … the mortgage loan industry reported a spike in foreclosures and defaults; and financial markets continued to contract, diminishing credit to financial institutions, businesses, and homeowners. These combined factors uncovered and fueled a rampant mortgage fraud climate fraught with opportunistic participants desperate to maintain or increase their current standard of living. Industry employees sought to maintain the high standard of living they enjoyed during the boom years of the real estate market and overextended mortgage holders were often desperate to reduce or eliminate their bloated mortgage payments.