In a story headlined “FBI: Mortgage Fraud Is Rampant in U.S.,” the AP reports today that “fraud is running rampant in the nation’s mortgage industry, with nearly three times as many reports of suspicious activity so far this year compared with 2001.” The piece notes further:

Through the first nine months of 2004, mortgage companies and banks have reported more than 12,100 instances of suspicious activity compared with only 4,220 in 2001. The FBI currently has 533 pending mortgage fraud investigations, compared with 102 in 2001…ne common mortgage fraud scheme is “property flipping,” in which property is purchased, appraised fraudulently at a much higher price and then quickly sold. The mortgage holder is then left with property worth much less than the loan it issued.

Other schemes involve fake identities and credit histories, use of “straw buyers” to conceal the true buyer’s name and forged loan documents.

The article fails to mention an obvious factor in the rise of mortgage fraud. Hint: Open borders. There are upwards of 13 million illegal aliens in this country, and they are not all crammed in apartment buildings and homeless shelters. As I reported last year, “The American dream of home ownership, complete with the white picket fence, is alive and well for those who break our laws and break down our fences to get in.” The Washington Post had trumpeted home loans for illegal aliens–just the tip of the housing fraud iceberg. More from my column:

A 25-year veteran of the mortgage industry in California confided to me recently: “It boggles the mind to think how many illegal aliens are homeowners in this country thanks to these programs, all fully insured by our government. Because of fear of lawsuits for discrimination I can also tell you that a lender may have a borrower who speaks little or no English who claims to be either a citizen or resident alien and it will not be questioned nor any proof required. Since FHA does not require any such documentation, a lender cannot cite their regulations as a basis for the request as they can on conventional loans.”

Another easy avenue to home ownership is through the use of bogus Social Security cards. Moneylenders have no access to a verification system to check Social Security numbers before approving loans. A Department of Homeland Security investigator informs me that an ongoing federal probe of FHA/HUD-backed loans found that “a staggering number were approved to persons with false Social Security numbers.” The Denver metro area alone accounted for 20,000 to 40,000 of the FHA-approved loans for suspected illegal aliens. “Even if a small percentage of the loans were foreclosed, HUD could be bankrupted,” the homeland security official said.

A spokeswoman for the U.S. General Accounting Office told me this week that the agency’s office of special investigations plans to report on the results of the probe later this fall. But “considering the size of Los Angeles, New York, Chicago, Houston, and other large cities throughout the United States known to be inundated with illegal aliens,” says my source, “I don’t think the federal government is willing to expose this problem for financial reasons as well as for fear of political repercussions.”

Nothing has changed.

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