Mortgage Fraud On The Rise In The USEric Rothmannupdated Jul 08, 2009TweetAt GET.com we maintain complete editorial integrity on our content & provide transparent & unbiased information. Companies don't pay us to include their products although we receive a compensation when you successfully apply to products from our partners. See how we make money here.At GET.com we maintain complete editorial integrity.Based on the Federal Bureau of Investigation's (FBI) report released July 7, 2009, suspicions of mortgage fraud increased significantly in 2008.During 2008, financial institutions reported losses of at least $1.4 billion, up by 83.4% over the 2007 level, and suspicions of fraud increased approximately 36.0% to 63,713 over the same time period. Interestingly, nearly two-thirds of all pending FBI mortgage fraud investigations during 2008 involved dollar losses totaling more than $1 million (basically McMansions; please see our "The Looming McMansion Attack"). The negative trend in the housing markets around the country have created an favorable environment for mortgage fraud schemes.There typically two types of mortgage fraud. The first, fraud for property focuses on applicants making misstatements to obtain a loan (embellishing income and concealing debt), and the second fraud for profit focuses on elaborate schemes to focus on falsifying appraisals and loan documents, which include identity theft and shell companies.Reports of fraud have not moderated during the 1H09 as losses are $208 million higher compared to the year ago level. The FBI believes attempts have the potential to spread as expectations for the current economic downward trend is expected to continue into 2009 and perhaps into 2010.The top 10 mortgage fraud states were California, Illinois, Texas, Georgia, Ohio, Colorado, Maryland, Florida, Missouri and New York. Therefore it's extremely probable that financial institutions such as but not limited to Citigroup (C), Bank of America (BAC), JPMorgan Chase (JPM), US Bancorp (USB) and Wells Fargo (WFC) will continue to experience negative credit quality trends during the coming quarters.Editorial Disclosure: Any personal views and opinions expressed by the author in this article are the author's own and do not necessarily reflect the viewpoint of GET.com. The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the companies mentioned, and have not been reviewed, approved or otherwise endorsed by any of these entities.