Real Estate Fraud

By Bradley, Daniel | The FBI Law Enforcement Bulletin, September 2008 | Go to article overview

Real Estate Fraud


Bradley, Daniel, The FBI Law Enforcement Bulletin


The increasing number of real estate foreclosures has become a significant financial issue negatively impacting the national economy. In 2005, 846,000 homes entered into foreclosure. The following year, the number increased 41 percent to over 1.2 million. In 2007, more than 2.2 million reportedly foreclosed, a 75 percent rise over 2006 and a 149 percent increase over 2005. (1) Most of the homeowners legitimately purchased their residences with adjustable rate mortgages (ARMs). Believing that their home values would rise, the buyers expected to refinance if necessary.

[ILLUSTRATION OMITTED]

However, a significant number of people were not innocent bystanders but perpetrators of a criminal conspiracy frequently involving real estate professionals and speculators, mortgage brokers, appraisers, and title companies. The actions of these individuals largely helped create a market with artificially inflated home prices, increasing the potential for values to decline and foreclosures to increase. This criminal activity has impacted communities nationwide and victimized everyone. A combined response by federal, state, and local law enforcement can punish the perpetrators and deter this activity in the future.

A SERIOUS PROBLEM

Individuals become involved in real estate fraud to obtain a residence to live in or to profit financially. Those committing the crime for monetary gain frequently participate in multiple transactions with the same group of coconspirators.

Real estate fraud hurts everyone, decreasing the values of homes, negatively impacting the stock market, and increasing the cost of borrowing. In the long run, not only do the lenders suffer but the stockholders and future borrowers pay increased fees for loan services so that the lenders can recoup their losses.

AN EFFECTIVE RESPONSE

Due to the broad and significant community impact of this type of fraudulent activity, the investigation of real estate fraud must receive a high priority. In view of resource limitations among agencies, an effective response requires a team approach involving federal, state, and local law enforcement and regulatory agencies.

Identifying Targets

Once established, the team can identify targets for investigation. To do so, law enforcement personnel should establish relationships with honest, ethical real estate professionals, lenders, and financial institutions within the community. These individuals and organizations scrutinize the local market and know when a sales price for a property or group of properties is significantly out of range or, of course, when they personally have been victimized. The local assessor and personnel in the recorder's office also closely monitor transactions and often are aware of sale or foreclosure anomalies within the community.

[ILLUSTRATION OMITTED]

Reviewing foreclosure records also can help identify coconspirators in fraudulent activity. Based on available information, investigators can look for connections, such as multiple foreclosures in a new housing development or numerous transactions involving the same buyer, seller, real estate agent, lender, or settlement agent.

Examining Documentation

After identifying targets, investigators next should collect documents regarding the transactions in question. In other types of white-collar crime investigations, documentation relative to a financial transaction frequently is available on a limited basis and is only in the possession of potential targets who do not have to maintain it. However, in real estate fraud investigations, the buyer, seller, mortgage broker, lender, real estate agent, appraiser, and settlement company maintain the records--in many instances, for an extended period of time by law. Rarely will investigators find a shortage of documentation that they can review and, frequently, identify discrepancies that, in and of themselves, indicate fraud. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Note: primary sources have slightly different requirements for citation. Please see these guidelines for more information.

Cited article

Real Estate Fraud
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen
Items saved from this article
  • Highlights & Notes
  • Citations
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA 8, MLA 7, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Search by... Author
    Show... All Results Primary Sources Peer-reviewed

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.