Whenever there are a group of people in the midst of a crisis, there are also always those who are out to capitalize on the crisis, and frequently in an illegal way, further adding to the people’s misery
The mortgage crisis has been no different. Pending cases for the number of investment and mortgage scams that specifically target homeowners in trouble increased by 12 percent in 2010 with a total of 3,129 casesof September 30, 2010, the end of the fiscal year. That number is up 90 percent from the previous fiscal year.
The FBI believes the numbers will continue to increase as more homeowners labor to make their mortgage payments. As wages remain stagnant and layoffs continue, coupled with the high number of foreclosures, more and more homeowners are falling for these scams.
The biggest schemes involve foreclosure rescue and loan modifications. The perpetrators of the scams are able to convince the homeowners that, through transferring their deeds or paying fees upfront to them, they will be able to salvage their homes. New York, California and Florida are among the hot spots for these frauds.
Investors are another target for fraud due to the volatile market conditions. Some investors are falling for schemes involving fake investments. The FBI is working closely with the Commodity Futures Trading Commission and the Securities and Exchange Commission to track down and prosecute cases of investment fraud.
The FBI’s biggest success was the $3 billion fraud case against the mortgage firm Taylor, Bean & Whitaker Mortgage Corporation. Lee Farkas, the chairman of the corporation, received a 30-year prison sentence.