Loss from real estate loan fraud soars to $1 billion

The Federal Bureau of Investigation has launched an initiative to combat what it describes as "the growing epidemic of mortgage fraud," targeting mortgage fraud groups, the agency said Wednesday.

The FBI identified California, Nevada, Utah, Arizona, Colorado, Missouri, Illinois, Maryland, Georgia and Florida as "hot spots" for mortgage fraud in activity in 2004. According to the agency, reported losses caused by mortgage fraud soared to more than $1 billion in the fiscal year 2005, up from $429 million in 2004.

The agency held a news conference Wednesday in Washington, D.C., on its "Mortgage Fraud Operation Quick Flip," which detailed investigations into the problem. The FBI defined hot spots as states having the highest fraud activity on a per capita basis, although it didn't release a state-by-state breakdown.

According to the FBI, the Department of Housing and Urban Development, the U.S. Postal Inspection Service, the Internal Revenue Service and the Department of Justice are all targeting mortgage fraud groups "in order to disrupt and dismantle them permanently."

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