Staying Alert to Mortgage Fraud

he housing boom of the early 2000s affected many areas of the TUnited States, as consumers and investors took advantage of low interest rates to purchase, upgrade, and invest in houses and condominiums. The entry, and general acceptance, of numerous nontraditional mortgage loan products into the financial land- scape also bolstered many people’s goal of achieving home ownership. The nontraditional products facilitated an increase in the dollar amount of Picture 1 mortgages individuals financed, which helped spur housing demand. As this demand increased, so did price appreciation, and the purchase of a house became more than just a home for many individuals: residential real estate became the new “golden egg.” Historically, a mortgage transaction involved two parties: the lender and borrower. Borrowers conducted their business across a desk at a local bank, and the only other people involved in the Picture 2 process were bank employees (or individ- include the second picture, which shows uals closely associated with the bank). the rear view of the property! The loan Today, a single mortgage transaction can was granted, and the lender incurred a involve a wide number of independent material loss upon subsequent foreclo- parties who may never meet the borrower sure and disposition of the property.1 or the lender. In addition, the pressure to This article explores common types close a loan quickly is paramount, as fast- of mortgage fraud, focusing on exam- paced consumers look for more conven- ples from a recent poll of FDIC examin- ience and less hassle. Unscrupulous ers. The authors also offer suggestions individuals are increasingly manipulating and links to additional information for these types of circumstances to their further support in mitigating the risks advantage, resulting in a significant and of mortgage fraud. growing mortgage fraud problem throughout the country. The following example demonstrates Mortgage Fraud Reaches New the egregious nature of mortgage fraud. Heights Picture 1 was included in a fraudulent Mortgage fraud activity has increased appraisal used to secure a $250,000 markedly in recent years. In 2005, mortgage loan on this home in Atlanta, reported losses associated with mort- Georgia. However, the appraiser failed to gage fraud passed the $1 billion mark

1 Ann D. Fulmer, Vice President of Industry Relations, Interthinx™; HUD STOP Conference, June 22, 2006, Savannah, Georgia.

12 Supervisory Insights Summer 2007 Chart

SAR Filings (Mortgage Fraud-Related) 30,000

25,000

20,000

15,000

10,000

5,000

0 1996 1998 2000 2002 2004 2006

Reported SARs Est. Add'l 2006

Source: Mortgage Loan Fraud: An Industry Assessment Based upon Suspicious Activity Report Analysis, November 2006 nationwide for the first time.2 As shown compared with 818 and 721, respec- in the chart titled SAR Filings, suspi- tively, in the two previous years. The cious activity reports (SARs)3 involving FBI estimates, however, that the actual mortgage fraud doubled from 2003 to number of mortgage fraud cases was 2004 and continue to increase. Accord- closer to 36,000 for the fiscal year ing to the National Association of Mort- ended September 30, 2006, compared gage Brokers, as many as two-thirds of with 22,000 the previous year.5 More all mortgages are originated by mort- than half of the current investigations gage brokers. When one considers involve expected losses greater than that mortgage brokers are not required $1 million, and financial institutions to file SARs, the actual volume of represent 57 percent of the victims. mortgage fraud activity could be much higher. Categorizing Mortgage Fraud As of early March 2007, the Federal Bureau of Investigation (FBI) had 1,036 The bulk of mortgage fraud falls into pending mortgage fraud investigations,4 two broad categories based on the moti- vation behind the fraud.

2 Mortgage Bankers Association, “Mortgage Fraud Perpetrated Against Residential Lenders,” July 2006, from their website. See www.mortgagebankers.org/files/Library/IssuePapers/ MortgageFraudPerpetratedAgainstResidentialLenders.pdf. 3 A suspicious activity report is a standard form used by all federally insured financial institutions to report activities of suspected criminal violations of federal law or suspicious transactions potentially related to money laundering. 4 FBI, Mortgage Fraud: New Partnership to Combat Problem, March 9, 2007. See www.fbi.gov/page2/march07/mortgage030907.htm. 5 Bob Tedeschi, “Mortgages: Fraud Cases Are Rising, FBI Says,” New York Times, January 14, 2007, http://homefinance.nytimes.com/nyt/article/mortgage-column-by-bob-tedeschi/2007.01.14. fraud-cases-are-rising-fbi-says.

13 Supervisory Insights Summer 2007 Staying Alert to Mortgage Fraud continued from pg. 13

I Fraud for property typically To get a picture of how mortgage involves a borrower who will over- fraud might be affecting insured finan- state income or asset values on cial institutions, and to provide some his or her financial statement to practical advice, the authors asked qualify for a loan to purchase a examiners from across the country to home. In many of these cases, provide examples of the more common expectations are that if the income types of fraud they were encountering. does not rise to meet the payment, The types of fraud most prevalent in the home will be sold at a profit examiners’ responses were from appreciation. I Broker-facilitated fraud; Fraud for profit involves more I Loan documentation fraud; complicated schemes and presents I a higher exposure to the market. I Appraisal fraud; Fraudulent methods are used to Property flipping; and acquire and dispose of property with I the inflated profits going to the I Misapplication of funds from perpetrators of the fraudulent trans- construction or rehabilitation action. Participants in these fraudu- projects. lent transactions involve a variety As illustrated in the examples that of insiders and third parties: straw follow, examiners are often not the borrowers, sellers, loan originators, ones to first discover a case of fraud. brokers, agents, appraisers, builders, The vast majority of fraud instances and developers. Opportunities for are discovered and reported by the fraud for profit involving insiders institutions themselves. are limited only by the perpetrator’s imagination.6 Broker-Facilitated Fraud According to a study by BasePoint Case Studies: Reports from Analytics LLC, broker-facilitated fraud Examiners has surfaced as the most prevalent 7 Bearing headlines such as “Eight segment of mortgage fraud nationwide. Broker-facilitated mortgage fraud occurs Indicted in Loan Scam” (Dallas Morn- ing News, March 9, 2007) and “Mort- when a broker materially misrepresents, gage Fraud Alleged in 149 Transactions” misstates, or omits information that a (Journal Gazette, Fort Wayne, Indiana, loan officer relies on to make the deci- 8 Broker-facilitated April 1, 2007), the media are filled with sion to extend credit. fraud can be fraud for property, fraud stories demonstrating the pervasiveness for profit, or a combination of both. For of mortgage fraud. Rarely, however, do example, the borrower may be commit- these stories offer insights into what might have been done to detect or ting the fraud with the primary interest prevent the fraud or the effect of the of obtaining a home, while the broker fraud on the insured institutions facilitating the fraud is motivated by involved. profit from closing the loan. The following represents a case of fraud for profit.

6 The Detection, Investigation and Deterrence of Mortgage Loan Fraud Involving Third Parties: A White Paper, Federal Financial Institutions Examination Council (FFIEC) Fraud Investigations Symposium, February 2005, www.ffiec.gov/exam/3P_Mtg_Fraud_wp_oct04.pdf. 7 BasePoint Analytics LLC, Broker-Facilitated Fraud—The Impact on Lenders: A White Paper (2006), www.basepointanalytics.com/mortgagewhitepapers.html. 8 Broker-Facilitated Fraud.

14 Supervisory Insights Summer 2007 Example: A $165 million community tion and warranty clauses in contracts bank decided to enter the mortgage with its brokers and thought it had banking business. The bank purchased recourse with respect to the loans a small mortgage company and hired being originated and sold through an experienced mortgage banker to the pipeline. run the operation. Nearly five years During the litigation, the third-party into the relationship, an investor noti- broker argued that the bank should fied the bank that several loans—all share some responsibility for this expo- originated through the same third- sure because its internal control systems party broker—were being returned for should have recognized a loan concen- repurchase. During the bank’s investi- tration to this one subdivision and insti- gation of these loans, the FBI alerted tuted measures to deter this risk. The the bank that they were investigating bank president acknowledged that the this same broker for possible fraud. monitoring system used at that time did The bank notified its primary federal not adequately measure concentration regulator, which then contacted the risk with respect to loans being gener- FDIC because of the potential impact ated by the mortgage banking business. on the bank’s financial condition. In addition to establishing an adequate Further investigation revealed that system to monitor concentration risk, the broker was working in collusion the bank president said that if he had it with a builder and an appraiser to flip to do over again, he would institute regu- properties over and over again for lar surprise audits to sample loan origi- higher, illegitimate profits. In total, nation documentation and make sure more than 100 loans were originated loans were being underwritten accord- to one builder in the same subdivision. ing to the bank’s standards. The bank incurred a loss of approximately $6 million and went to the third-party broker for reimbursement Mitigating Steps: of the loss. The broker refused to make • Establish a system to monitor concentration the payments, and the case went into risk by broker and by project. litigation. The bank was eventually awarded $3.5 million. • Institute surprise audits to sample loan origination documentation. Lessons Learned: In a subsequent discussion with FDIC examiners, the bank’s president indicated that he had Loan Documentation Fraud always heard that the most difficult part of mortgage banking was making sure While broker-facilitated fraud and loan you implemented the right hedge to documentation fraud are closely aligned, offset any interest rate risk the bank loan documentation fraud extends might incur while warehousing a signifi- beyond mortgage brokers to all indi- cant volume of mortgage loans. He did viduals involved in the process. Loan not focus much attention on mortgage documentation fraud may involve a loan origination because the bank made borrower, broker, or lender knowingly sure the contracts with the brokers it making written false statements or concealing material facts to influence used included language requiring the the approval of the loan. brokers to reimburse the bank for any nonconforming loans that were According to the BasePoint Analytics returned by the ultimate investor for study, the most common types of fraud repurchase. The bank had representa- are employment, income, and occupancy

15 Supervisory Insights Summer 2007 Staying Alert to Mortgage Fraud continued from pg. 15

misrepresentations—all of which relate tion on her employment application. A to documentation.9 The Mortgage Asset call to her former employer would have Research Institute (MARI) reports that revealed that she had been terminated in a sample of loans by one of MARI’s from that financial institution for orches- clients, 90 percent of stated incomes trating the very same type of fraud. In were exaggerated by 5 percent or more, addition, instituting periodic quality and 60 percent of stated incomes were control measures, such as sampling loan inflated by more than 50 percent.10 The files, could have identified these practices ultimate effect of loan documentation early and limited the bank’s exposure. fraud on property values and the overall economy remains to be seen. Loan documentation fraud is most often fraud for Mitigating Steps: property, although if the lender or broker is aware of the deception, as in the first • Establish a “Know Your Employee” program. example below, fraud for profit (income • Conduct background checks on new for the lender or broker) may also be employees. involved. • Conduct periodic credit checks on existing Example: A $43 million community employees. bank hired a mortgage loan officer for • Establish clearly defined quality control a new loan program designed to benefit requirements. minority individuals with poor or no • Provide ongoing employee oversight and credit histories. The loan officer began training. generating consistent business, and management did not closely monitor • Structure compensation agreements to her activities. The loan officer provided include loan quality as a contributing factor. credit to individuals who were using false or stolen Social Security numbers. She Example: A $1 billion urban financial also accepted, and in some cases actually institution became heavily involved in generated, false or questionable docu- wholesale mortgage lending and began ments to support the loans, including pressuring employees to increase loan false rental and utility payment histories. production. A disgruntled employee The bank became aware of the problem notified FDIC examiners about wide- only when another institution, which spread documentation fraud in the had purchased some of these loans, bank’s residential mortgage banking conducted due diligence and discovered business. Reportedly, intense pressure the falsified information. The bank had from senior management to increase to repurchase these loans, but the bank’s loan production resulted in a practice of total exposure has not yet been deter- altering documents by cutting and past- mined. The FDIC became aware of this ing customer signatures on different fraud through a routine review of SARs forms to manufacture false loans. These filed by both institutions. loans were being packaged and sold to Lessons Learned: A thorough back- third-party investors, leaving the bank ground check on the loan officer would vulnerable to potential buyback claims. have disclosed that she used a false Social The disgruntled employee surrendered Security number to obtain her position documents to the FDIC that bank with the bank and falsified other informa- management allegedly told him to

9 Broker-Facilitated Fraud. 10 Merle Sharick, Erin E. Omba, Nick Larson, and D. James Croft, “Eighth Periodic Mortgage Fraud Case Report to Mortgage Bankers Association,” Mortgage Asset Research Institute, Inc. (April 2006), www.mari-inc.com/ reports.html.

16 Supervisory Insights Summer 2007 destroy in an effort to hide the files from tactics of appraisal fraud. Questionable regulators. The FDIC continues to inves- practices include “windshield appraisals,” tigate this case, including possible false where appraisers merely drive by a prop- statements by one senior manager that erty and use inappropriate comparables may result in a prohibition action, crimi- that will get the value where they want it nal violations, and prosecution. to be. In some cases, appraisers may fraudulently overstate the benefits of a Lessons Learned: The board of directors particular property to back into the value and the audit committee did not establish needed for the loan. Appraisal fraud can comprehensive reporting and monitoring be used to qualify an undervalued home procedures, largely delegating this for a higher mortgage amount (usually responsibility to operating management. fraud for property) or to inflate the value Information provided to the board was of real estate so that the property can be usually informal and lacked adequate, resold or flipped quickly to a straw or useful detail. Examiners recommended duped buyer and the profit retained by that the board establish clear expecta- perpetrators (fraud for profit). Under the tions for the timing and reporting of peri- first scenario, appraisers may be pres- odic quality control initiatives (e.g., loan sured by mortgage brokers or loan offi- documentation sampling). Examiners cers to falsify an appraisal so that a loan also recommended that management transaction can be approved. Under the perform a risk assessment to determine second scenario, the appraiser actually areas of increased exposure and provide works in collusion with other conspira- fraud identification training to staff, tors to perpetrate the fraud. including originators, processors, under- writers, and internal audit personnel. Example: A small community bank Properly trained staff can help identify (total assets less than $250 million) red flags such as white outs, squeezed-in became involved in an inflated appraisal names or numbers, and illegible signa- fraud scheme. The bank discovered tures with no supporting identification or inflated appraisals on residential prop- verification information. erties securing loans to two borrowers when those borrowers defaulted on the debts. The bank later determined Mitigating Steps: that one of the borrowers owned the appraisal firm that prepared the original • Adopt periodic quality control measures, appraisals for these properties. The including loan file sampling. borrowers allegedly worked in collusion • Train personnel to identify and report red with bank loan officers to finance these flags. properties at inflated values. In total, the bank financed dozens of residential • Institute adequate internal reporting properties, with a combined original procedures. (fraudulent) appraised value totaling approximately $2 million. After the defaults, these properties were reap- Appraisal Fraud praised at less than one-third of their Appraisal fraud is usually outright original appraised value. The bank fraud or negligence on the part of the suffered a significant loss, which has appraiser, often in collusion with other been difficult for it to absorb. The FDIC parties. Some institutions have internal is seeking a removal/prohibition action appraisers, but most use outside compa- against the loan officers involved, who nies. Manipulating or inflating the have resigned from the bank. The FDIC comparable locations, market values, became aware of this fraud by reviewing and property characteristics are all SARs submitted by the institution.

17 Supervisory Insights Summer 2007 Staying Alert to Mortgage Fraud continued from pg. 17

Lessons Learned: Once these activities Property Flipping were uncovered, the bank worked aggres- Property flipping is the practice of sively to identify all relevant exposure by purchasing properties and reselling them getting new appraisals and providing adequate loan loss reserves. However, at artificially inflated prices to straw or 11 some improvements to the bank’s loan duped buyers and is strictly fraud for review and monitoring procedures could profit. Flipping schemes typically involve have helped the bank identify negative fraudulent appraisals, doctored loan trends prior to the borrowers defaulting documentation, or inflated buyer on the debts. First, the bank’s monitor- income. Financial incentives to buyers, ing procedures were not sophisticated investors, brokers, appraisers, and title enough to establish a connection company employees are also common between either the borrowers or the and indicate the degree of collusion appraisals supporting these loans. As a necessary to flip a property. Based on result, this increasing level of exposure existing investigations and mortgage remained largely undetected. Second, fraud reports, the FBI estimates that while each loan was relatively small, the 80 percent of all reported fraud losses combined total of these loans was signifi- involve collaboration or collusion by cant. However, because of the small size industry insiders.12 A particularly trou- of each loan, the bank’s internal loan blesome aspect of property flipping is review did not pick up any of the loans. that it taints property sale databases and The bank would have benefited by chang- presents the illusion of rising property ing the scope of its loan review to include values in neighborhoods where the flip- a sampling of loans from all loan officers, ping takes place. regardless of the loan size. Finally, the Example: During a routine examination bank was not completely familiar with of a $1 billion financial institution, exam- the appraisal firm used to value the iners became suspicious when they collateral supporting these loans. If the noticed that one loan officer worked ownership structure of the appraisal firm apart from other loan originators and had been investigated initially, the bank had processing personnel dedicated to would have discovered this apparent his loan originations. Bank management conflict of interest, which would have indicated the loan officer was the bank’s triggered additional investigation. highest producer and that “even a bad month was a good month” for that loan Mitigating Steps: officer. The loan officer maintained a high number of loan originations, even • Develop reports that track problem loans by though he took no referrals from the loan officer, broker, appraiser, underwriter, phone queue. On further investigation, branch office, settlement agent, and so on. the FDIC discovered that the loan officer • Vary the internal loan review scope to had an undisclosed relationship with a include a sample from all loan officers. local mortgage broker. Examiners’ review of the officer’s lending activity • Research the background and ownership of revealed several loans that had been orig- appraisal firms. See 12 CFR 323 of FDIC Rules inated, sold, and then quickly fell into and Regulations for additional guidelines on foreclosure. Properties were also refi- appraisal and appraiser requirements. nanced rapidly, with an affiliate of the

11 Vernon Martin, “Detection of Mortgage Fraud,” RMA Journal, September 2004, www.findarticles.com/p/ articles/mi_m0ITW/is_1_87/ai_n14897572. 12 FBI, “Financial Crimes Report to the Public, Fiscal Year 2006.” See http://www.fbi.gov/publications/financial/fcs_report2006/financial_crime_2006.htm.

18 Supervisory Insights Summer 2007 broker placing second mortgages on the Misapplication of Funds from property that would immediately be paid Construction or Rehabilitation from the next refinance. A sample of the Projects officer’s loan documentation discovered altered or falsified account statements, Construction or rehabilitation project purchase and sale agreements, income loans are normally established as operat- figures, credit reports, and verification of ing lines of credit. Borrowers make draws deposit forms. The loan officer has since upon these lines of credit and use these resigned from the institution and is the funds to complete various phases of a subject of an ongoing criminal investiga- proposed construction or rehabilitation tion. Total loss exposure to the bank is project. Draws are usually matched to the percentage of the project that is still being determined; however, the bank complete, with a final percentage held has already had to repurchase several back as an abundance of caution. For loans as a result of this officer’s actions. example, a builder may ask for a draw Lessons Learned: Bank management that represents 20 percent of the focused on income generated by this loan loan/line total, with verified completion officer and overlooked or ignored several actually totaling around 23–25 percent. key matters that would normally trigger The draw is used to pay subcontractors further investigation. First, the isolation for work performed, as well as to provide of this loan officer from others, including working capital for the builder, whose separate processing support, allowed him fees are built into the line. to dominate transactions from start to Under fraudulent circumstances, finish. The lack of dual control over builders may use funds or draws on one these transactions greatly enhanced the project to pay for improvements related loan officer’s ability to perpetrate the to another project, or may simply divert fraud. Second, the lack of proper review funds or draws for their own enrichment— and oversight allowed the relationship fraud for profit. When this happens, with the mortgage broker to remain subcontractors do not get paid, and, in undisclosed to management. Implement- some cases, no improvements are made ing periodic quality control audits to to the property. In the end, the builder verify the accuracy and completeness of exhausts the line of credit, and the bank documentation would have brought these is left to dispose of a property with very activities to light, including the rapid refi- little supporting value. nancing of properties and falsified loan Example: A $365 million community support documentation. bank authorized 13 construction lines of credit to a local builder for the construction of speculative houses—those built Mitigating Steps: without a buyer or signed purchase agree- ment. As soon as the lines were approved, • Verify the quality of business generated by the builder began requesting draws. The high-volume producers. builder used falsified sales contracts to • Establish dual control over loan processing mislead the loan officer into believing and fund disbursement. many of the homes were presold. The • Implement periodic audits of loan origina- loan officer routinely advanced funds to tions by officers. the builder and signed off on construction inspection documentation without • Conduct postmortem reviews of loan losses ever actually inspecting the construction and look for common names of participants sites. After some time had elapsed with in the loan origination or processing areas. no corresponding sales activity, the loan

19 Supervisory Insights Summer 2007 Staying Alert to Mortgage Fraud continued from pg. 19

officer began pressing the builder about the status of construction and requests Mitigating Steps: for new money. The builder confessed that no houses had been constructed on • Monitor construction draws. 11 of the bank’s 13 construction lines. • Complete and document on-site inspections. The bank ultimately recorded a loss of $2 million on the $2.6 million construction • Verify sales contracts. line. The builder was convicted of fraud • Monitor builder checking account activity. and sent to federal prison. The FDIC banned the loan officer from banking. The loss had a significant impact on the bank’s earnings, and the institution’s Establishing Controls: A reputation was tarnished as a result of Commonsense Approach local media coverage. The FDIC became Fraud is often compared to a triangle, aware of this fraud by reviewing SARs with the three points of the fraud triangle submitted by the institution. being motive, rationalization, and oppor- Lessons Learned: The monetary reward tunity. The element of opportunity is and success of attracting and signing a particularly heightened at financial institutions because of the cash and financial loan client is much more attractive than transaction nature of the business. As the subsequent job of properly adminis- can be seen from the examples and miti- tering the credit; however, both are gating steps in this article, developing equally important to a financial institu- and implementing a sound internal tion. In this instance, the loan officer control environment—including sound became busy with other responsibilities lending fundamentals, quality control and did not devote the time necessary to procedures, and audit programs—is a key properly monitoring construction draws factor in reducing the opportunity for all and documenting the proper allocation types of mortgage loan fraud. While most of funds to each project. The institution institutions are aware of these safeguards, had no established procedures or forms the cost/benefit of internal controls for conducting and documenting on-site sometimes precludes management from inspections, except to check the “inspec- making internal controls a top priority. tion” box on the disbursement form. Consequently, to authorize a construc- In addition to the mitigating steps already identified, some banks are tion draw and deter loan review atten- exploring automated fraud detection tion, the loan officer would falsely products introduced over the past several indicate on loan disbursement forms that years. These software applications search construction inspections had been bank loan databases and compare completed. Loan oversight was limited to borrowers, loan participants, common verifying that the “inspection” box was names, addresses, employers, appraisers, checked, with no subsequent confirma- and the like, to detect potential red flags tion or review of supporting documenta- or signs of mortgage fraud. These prod- tion. In addition, the bank did not review ucts produce summary ratings or reports or monitor the builder’s deposit account that serve to identify loans or groups of activity, which would have revealed loans that may represent an increased construction draws being used for a risk of mortgage fraud and require multitude of purposes unrelated to the further investigation. The ultimate deci- project. Verifying the legitimacy of the sion as to whether these products repre- sales contracts with the proposed sent a cost-effective solution remains an purchasers also would have immediately independent choice for each institution. alerted the bank of a possible problem. However, it is important that all institu-

20 Supervisory Insights Summer 2007 tions consider the potential impact of Jeffry A. Petruy fraud and establish adequate provisions Examiner, for this risk as part of their normal prof- Gainesville, FL itability and budgeting process. Corbin Harrison Examiner, Atlanta, GA Conclusion Mortgage loan fraud is a large and Rebecca A. Berryman growing problem. It can occur in any Senior Capital Markets and neighborhood and requires that all Securities Specialist, parties concerned maintain a high level Atlanta, GA of vigilance. Bank management should Timothy J. Hubby keep alert to fraud triggers, ask ques- Assistant Regional Director, tions, review mortgage documentation, Atlanta, GA perform verifications, and report suspicious activity to the appropriate regula- Acknowledgments: The authors would tory and law enforcement authorities in a like to acknowledge the assistance timely manner. While even the best inter- provided by Stephen Corona, Office of nal control environment will not prevent Federal Housing Enterprise Oversight; mortgage fraud in all instances, strong Barbara Nelan, Assistant United States internal controls, coupled with an alert Attorney, Northern District of Georgia; and knowledgeable staff, are a financial Sandra Sheley, Director of Mortgage institution’s best line of defense. Supervision, Georgia Department of Banking and Finance; Ed Slagle, Special Ken A. Edwards Agent, and Gary L. Sherrill, Senior Supervisory Examiner, Special Agent, Office of Inspector Albany, GA General, FDIC.

Resource Links Community groups, industry-related coali- Federal Deposit Insurance Corporation, Risk www.hud.gov: Department of Housing and tions, regulatory authorities, and federal, Management Manual of Examination Poli- Urban Development state, and local governments have volumes cies, Sections 9.1–Fraud, and Section of information and resources available to 10.1–Suspicious Activity and Criminal www.fbi.gov: Federal Bureau of Investigation anyone looking for additional information Violations www.mortgagefraudblog.com: Central on mortgage fraud. Many states provide Websites: clearinghouse on recent mortgage fraud websites with consumer information and schemes, indictments, and prevention online access to forms used to report www.occ.treas.gov: Office of the Comptrol- fraud. The following is a list of a few of the ler of the Currency (federal regulator for www.grefpac.org: Georgia Real Estate many available resources: national banks) Fraud Prevention and Awareness Coalition The Detection, Investigation and Prevention www.fdic.gov: Federal Deposit Insurance (and similar community groups throughout of Insider Loan Fraud: A White Paper, Corporation (federal regulator for state- the country) FFIEC Fraud Investigations Symposium, chartered nonmember banks) www.mbafightsfraud.mortgagebankers.com: May 2003 www.ots.treas.gov: Office of Thrift Supervi- Mortgage Bankers Association Mortgage Fraud Perpetrated Against Resi- sion (federal regulator for federally char- www.ganet.org/dbf.dbf.html: Georgia Depart- dential Lenders, Mortgage Bankers Asso- tered savings institutions) ciation, July 2006 ment of Banking and Finance (and other www.federalreserve.gov: Board of Gover- appropriate state regulatory authorities) Financial Crimes Report to the Public, nors of the Federal Reserve System (regu- Federal Bureau of Investigation and lator for state-chartered member banks) Department of Justice, May 2005

21 Supervisory Insights Summer 2007