The latest statistics from the Federal Bureau of Investigation confirm that mortgage fraud is on the upswing.

"We can't find a chart that doesn't show up in a big way," special agent Bill Stern said at a conference on the topic earlier this month in Las Vegas.

Even worse news, the FBI's mortgage fraud coordinator in Washington said, is that the trend is moving away from rogue individuals who pull off the scams and toward members of organized crime.

"Mortgage fraud is now a criminal enterprise that puts dollars in the hands of people who also are involved in such other crimes as drugs, murders and gangs," Stern told the conference.

As of early this month, the G-man reported, the number of suspicious activity reports concerning mortgage fraud is up 62 percent from a year earlier. That, he said, "is a stark increase" compared to those alleging commercial loan fraud and false statements.

Also up is the number of pending cases, the number of charges and convictions and the amount of cases in which losses against financial institutions, the government and individuals exceed $1 million, Stern reported.

"We are now are prosecuting new cases at the rate of one a day," he told the conference. As of the first week of December, he also reported, 54 percent of the losses attributed to mortgage fraud were more than $1 million.

Noting that the FBI must focus on these larger cases because it doesn't have the resources to pursue every suspect, Stern called on the mortgage business to work hand-in-hand with law enforcement officials at the state and federal levels.

"We can't work these cases in a vacuum like we do drug cases, where lives are in danger and you don't need any special expertise," he told the meeting.

Encouraging lenders to participate in working groups and industry task forces "so we can leverage off your expertise," the FBI official said agents can't go to mortgage finance school for six months before they tackle a case of possible mortgage fraud.

"We don't have agents who work only mortgage finance cases as a career. They work a terrorist case, then a fraud case, then another kind of case, and they are all very different things. So we look to industry as a resource in helping us fight this growing crime."

And to anyone in the housing finance system who has ever turned suspicious activities into the FBI for investigation and received no response, even months later, the G-man also let it be known that the agency feels your pain.

"We share your frustration," he said. "Agents who devote hundreds of hours investigating cases that aren't prosecuted are frustrated, too."

Stern's mournful statement was in answer to a conference participant who wanted to know how come he never heard back from the FBI after his company had spent hundreds of thousands of dollars in time and money to investigate possible corruption.

A supervisory special agent who is the mortgage fraud point man in Washington who decides how the FBI's 56 field offices can best focus their limited resources, Stern didn't have a direct answer for the questioner, who asked what it takes to get the agency to investigate a possible crime.

The man said that while his company lost $6.2 million, the state was able to gain six felony plea agreements with the perpetrators.

Stern responded that the amount of the loss seemed sizable enough to warrant the FBI's interest. But since he wasn't familiar with the case, he couldn't provide a more specific answer, other than to say "all cases can't be prosecuted."

"It all comes down to monetary loss," the special agent explained.

Published: December 27, 2006

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.