California a leader in mortgage fraud
March 8, 2012
California continues to lead the nation in questionable home loans, with Santa Clara, Orange and San Bernardino counties among the areas with the highest number of suspected mortgage fraud cases, federal financial officials reported this week. [CaliforniaWatch]
San Luis Obispo Counties was ranked in the second to the top of five ratings of counties with higher levels of mortgage fraud.
Three California cities were among the top five metro areas ranked by reported mortgage fraud. San Jose was the top-ranked metropolitan area per capita, followed by Riverside and Los Angeles, according to the U.S. Treasury Department.
The rankings are based on mortgage fraud suspicious activity reports filed by banks and other financial institutions from July to September 2011 [PDF].
“As housing markets look to recover, criminals persist in their efforts to prey on struggling homeowners, while financial institutions continue to uncover apparent fraud as they work through their portfolios of earlier mortgages now in default,” said James H. Freis Jr., director of the Treasury Department’s Financial Crimes Enforcement Network. “FinCEN will continue to monitor these reports and work closely with law enforcement to help them track illicit actors,” Freis added.
Since 2002, California has consistently ranked near the top among states with suspected mortgage fraud. As a result, state and federal officials are sharpening their focus on mortgage fraud in the face of growing criticism by homeowners, activists and banking experts about the lack of fraud prosecutions since the 2008 housing crash, California Watch said.
In 2010, California Attorney General Kamala Harris created a statewide Mortgage Fraud Strike Force slated to focus on all aspects of unscrupulous lending.
“We are looking at a situation of up to $640 billion in wealth having been lost because of this wave of foreclosures that has hit the state,” Harris said to the Los Angeles Times, referring to the decline in homeowner equity. “There is a direct connection” between mortgage fraud “and the issue that we are challenged with in terms of our state budget crisis.”