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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