I am currently looking to update this post, but let me know if you have any information that updates these findings…
Update 10-9-2012: www.Bettermarkets.com calculates the total cost to date over $12.8 Trillion. Source: http://www.bettermarkets.com/reform-news/viewpoint-128-trillion-and-counting-cost-financial-crisis
According to the Atlanta Business Chronicle October 8-14, 2010 page 22A, and the Financial Crisis Inquiry Commission, at least 13% of mortgages originated between 2005 and 2007 had some element of fraudulent activity.
Apparently, 2 Atlanta zip codes (30310 and 30315) are among the top 10 zip codes for fraud….I think I had heard about these two zip codes a couple of years ago. Also, Georgia ranks 6th in nation in amount of mortgage fraud.
Scariest part of article said the $1 trillion is a low-ball estimate and it could be as high as $4.8 TRILLION!
According to page 3 of the WSJ – 8-23-2010, losses rose over 15% last year after falling about 60% over the previous 2 years.
In 2009, almost $14 Billion in loans originated were fraudulent.
Mortgage fraud based on false appraisals rose almost half as many between 2008 and 2009.
Loan Application fraud accounts for about 60% of all mortgage fraud, which obviously leave 40% of fraud that involves other non-applicants – real estate agents, appraisers, attorneys, etc,.
In short, the scam was to get someone with good credit applying for no-doc loans (which are now non-existent). Another twist of a scam is when someone rented a property, redirected & collected mail, and acquired the owner’s SS# and subsequently their identity, then sold his house.
I believe the above information might only be related to conventional loans backed by the US Government.
Per the 6-4-2010 WSJ (page C10), additional FHA loans may have not met underwriting guidelines. Just the 2008 FHA loans amounted to $205 Billion. FHA has stopped taking FHA loans from several lenders causing some to fold and leave no resources to buy back bad loans. (Maybe FHA loans that shouldn’t have been made.) Fannie and Freddie are demanding payments as reimbursements on bad loans.
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