Prosecutors from California to Georgia are exposing hundreds of real-estate-fraud schemes that have wrecked individuals’ credit scores, dotted neighborhoods with foreclosures, and left banks and taxpayers holding the bag for hundreds of millions of lost dollars, reports the Chrsitian Science Monitor. Real estate fraud has emerged as the nation’s fastest-growing white collar crime. Industry losses ran to at least $606 million last year. Treasury Department suspicious-activity reports are up 35 percent this year. The Internal Revenue Service’s criminal case numbers in mortgage fraud have been doubling every two years through the first half of this decade.
If the downturn continues past 2007, experts say the implications for the economy could be dire.”Real estate fraud is going to make the S&L crash look like two cars in the parking lot that bumped into each other at five miles an hour,” predicts Ralph Roberts, the author of “Flipping Houses for Dummies.” Georgia is a major hot spot; metro Atlanta has become known as the mortgage fraud capital of the U.S., according to rankings by Fannie Mae. Automated lending procedures, aimed at eliminating discrimination, have made it easier for fraudulent applications to slip through. The decline of local banking in favor of nationalized mortgage syndicates also contributes to fraud, as does the recent move toward sub-prime, high-interest loans.