The New York Times says that the FBI has begun an investigation that includes almost the entire mortgage industry—from the lenders to the brokers to the Wall Street banks who packaged the loans as securities. They’re cooperating with the SEC and wouldn’t name which firms they’re targeting, but the Times said that it includes 14 companies.
The F.B.I. has been warning for years that mortgage fraud is a significant and growing problem. In the 2006 fiscal year, it documented 35,600 suspicious-activity reports related to mortgage fraud, up from 22,000 the year before and as few as 7,000 in 2003.
Many of the cases the F.B.I. has brought so far have focused on local or regional mortgage fraud rings that involve speculators, loan officers, brokers and other housing professionals.
State officials have been active in bringing mortgage cases. The New York attorney general, Andrew M. Cuomo, is investigating whether Wall Street banks withheld damaging information about the loans they were packaging. Prosecutors in Ohio, Massachusetts, Illinois and Connecticut have also been looking into the industry.