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Column: Mortgage menaces hit close to home, stats show

By Robert Trigaux, Times Business Editor
In print: Sunday, June 22, 2008

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The creaking wheels of federal justice turned a bit last week with the FBI's unveiling of its Operation Malicious Mortgage, a crackdown on mortgage frauds topping a combined $1-billion and involving more than 400 defendants nationwide charged over the past 31/2 months.

It's classic Hollywood showmanship. How many days and man-hours were spent in the J. Edgar Hoover HQ just coming up with the alliterative Malicious Mortgage monicker? Still, the white-hat FBI posse arrived, finally, in town to warn whatever scamming saps are still around that they are in trouble.

"To persons who are involved in such schemes, we will find you, you will be investigated and you will be prosecuted," FBI Director Robert Mueller said.

Let's hope so. The housing bubble and collapse has been under way for years and law enforcement takedowns of substance have been the exception.

It's no secret experts years ago pegged Florida as the No. 1 spot for mortgage fraud. If the FBI's numbers are right, we may be on the front end of an arrestfest for housing-related skulduggery.

For starters, the feds say 19 mortgage lenders, investment banks, hedge funds, credit-rating agencies and accounting firms are under review. Mueller notes mortgage-related investigations have jumped threefold recently, with 1,400 inquiries into accounting fraud, insider trading and other schemes.

South Florida's voluminous fraud easily overshadows that of the Tampa Bay area, but we have little to brag about. Cases of suspected mortgage fraud in Central Florida are up 365 percent since 2004, the FBI office in Tampa says. Last year here, lenders filed 2,041 mortgage fraud complaints, up from 439 in 2004.

Nationwide, banks reported nearly 53,000 cases of suspected fraud last year, up from more than 37,000 a year earlier. And fraud complaints by consumers rose 31 percent to 46,717 in the fiscal year that ended Oct. 31 over the previous fiscal year.

In the Tampa Bay area, Florida Attorney General Bill McCollum recently sued four foreclosure rescue companies, accusing them of fraud and deceptive trade practices. And 17 area companies are under investigation by McCollum's mortgage fraud task force.

The latest mortgage scams are many and creative. Consider "builder-bailout" schemes in which developers unload excess inventory through financial trickery. Or foreclosure rescue frauds that cajole homeowners into signing over the deed to their house. Or seller-assistance scams that use false appraisals to sell homes. Or identity theft that leads to home equity credit lines being opened and drained.

In the time it's taken to read this, another malicious Florida mortgage fraud has occurred. Protect yourself.

Robert Trigaux can be reached at trigaux@sptimes.com or (727) 893-8405.