The Crime Scene: FBI Provides Update on Fraud

CHICAGO–Kyle Armstrong, Supervisory Special Agent with the Federal Bureau of Investigation, said mortgage fraud is hitting every part of the U.S. in every one of the Bureau’s 56 field offices.

“There’s a saying–when the tide goes out, you see who’s swimming naked,” Armstrong said here at the Mortgage Bankers Association’s Risk Management, QA and Fraud Prevention Forum. “But fraudsters are not so easy to detect, and they’re not so easy to stop.”

Armstrong, a special agent in the Money Laundering and Forfeiture Division with the Bureau’s Bank Fraud Unit, noted an increase in mortgage-targeted “phishing,” much of it based on Facebook and Google. “They target realtors and lenders and create sophisticated schemes in which those realtors and lenders are unaware that they’ve been targeted,” he said. “Nobody knows they’ve been a victim until several days later. And by then, it’s hard to retract.”

Much of the money scammed goes overseas, Armstrong said, through sophisticated “mules” who transfer the money into numerous accounts, which become harder and harder to track.

And it adds up. The FBI reported in 2019 more than $12 billion in mortgage fraud schemes, and average of $162,000 per incident. “If you rob a convenience store, you get $700 and 25 years in prison,” Armstrong said. “If you engage in a phishing scheme, you end up with $162,000 in Nigeria, where the average income is far less than here in the U.S., and it’s virtually impossible to prosecute them once the money’s been transferred.”

The best way to prevent fraudulent origination is verification. “You have to engage in best practices to verify the customer’s information,” Armstrong said. “If you suspect something has happened, contact us.”