FBI lists NY among hot spots for mortgage fraud

Mortgage fraud remains widespread in the depressed housing market, with perpetrators motivated by high profits and little risk of getting caught, the FBI said Friday, listing New York as one of the hot spots in 2010.

The FBI's annual report said mortgage schemes are particularly resilient and hard to discover, and their total cost is unknown. Real estate firm CoreLogic says more than $10 billion in loans originated with fraudulent application data last year, the report noted.

The top states for mortgage fraud last year were California, Florida, New York, Illinois, Nevada, Arizona, Michigan, Texas, Georgia, Maryland and New Jersey, the FBI reported.

Fraud last year remained at levels seen in 2009 as the housing market remained in distress, providing ample opportunity for schemes, the report said. It predicted that perpetrators would "continue to seek new methods to circumvent loopholes and gaps in the mortgage lending market."

"These methods will likely remain effective in the near term, as the housing market is anticipated to remain stagnant through 2011," the FBI said.

The schemes include short sale fraud and illegal flipping of houses. The FBI says perpetrators include licensed and unlicensed brokers, real estate agents, attorneys and other members of the industry who use their expertise to exploit vulnerabilities in the sector, as well as organized crime groups from overseas.

"Mortgage fraud enables perpetrators to earn high profits through illicit activity that poses a relative low risk for discovery," the report said.

The agency says it is dedicating resources to combat the threat, including an initiative launched in June 2010 called Operation Stolen Dreams that targeted mortgage fraud throughout the country.