Lax lending standards and the high cost of housing caused an increase in mortgage fraud in Hawai'i during the past few years, outpacing the majority of Mainland markets dealing with similar schemes, according to the FBI.

Beginning March 1, the FBI's Honolulu division opened more than a dozen investigations and identified more than 80 individuals and three schemes developed to defraud Hawai'i homeowners as part of a push to arrest and prosecute mortgage fraud purveyors.

Officials said the number of investigations and individuals here is more than the FBI is seeing in comparable jurisdictions on the Mainland.

"Greedy people looking to make an easy buck found Hawai'i's hot housing market to be a lucrative place to operate their scams," said Janet L. Kamerman, special agent in charge of the FBI's Honolulu division. "The mortgage fraud schemes we have thus far identified in Hawai'i are as diverse as the individuals and groups running them."

The "fraudulent activities" of more than a dozen local mortgage brokerages are under investigation by the FBI and officials estimate losses from the schemes stretch into the millions of dollars. Officials declined to name the local brokerages.

"This is one of those silent crimes that is so devastating to our community and so damaging to those families who are thrown out in the street," said Ed Kubo, U.S. attorney for the district of Hawai'i. "These are tough times. In this economy when we are seeing people losing their homes and losing their jobs, these types of crooks need to be called on the carpet and accounted for."

Kubo said that in 2005, Hawai'i ranked 38th in the nation for the number of mortgage fraud cases, according to the Mortgage Asset Research Institute. More recent statistics were unavailable yesterday.

Five indictments for mail fraud, wire fraud and making false statements on loan applications were unsealed May 16 and the five people charged in connection with the case face trial Sept. 23.

60 ARRESTS ON MAINLAND

Yesterday's announcement from local authorities coincided with news of a nationwide crackdown on mortgage fraud dubbed "Operation Malicious Mortgage."

Nationally, between March 1 and June 18, 44 mortgage fraud cases produced charges against 406 defendants.

On Wednesday, 60 arrests were made in mortgage fraud-related cases in 15 federal districts across the country. None were made in Hawai'i.

Charges in "Operation Malicious Mortgage" cases were brought in every region of the United States and in more than 50 judicial districts by U.S. attorneys' offices. There are 89 judicial districts covering the 50 U.S. states and territories such as Guam, Puerto Rico and the U.S. Virgin Islands.

The FBI estimates that approximately $1 billion in losses were inflicted by the mortgage fraud schemes employed in these cases. Kubo said nationally, the number of mortgage fraud cases investigated in 2006 increased by nearly 64 percent from the year before.

"Mortgage fraud poses a significant threat to our economy, to the stability of our nation's housing markets and to the peace of mind of millions of American homeowners," Deputy Attorney General Mark Filip said yesterday at a news conference in Washington, D.C.

Law enforcement officials said their stepped-up focus on mortgage cases aims to combat problems that have grown out of the risky lending practices prevalent until the mortgage market collapse started last year.

ONGOING INVESTIGATIONS

In Hawai'i, the FBI is looking at real-estate agents, mortgage bankers, home builders, attorneys, appraisers and buyers who "knowingly allow some frauds to occur so that they can purchase property," according to the U.S. attorney's office.

Investigations are open and ongoing on O'ahu, the Big Island, Maui and Kaua'i.

The indictment unsealed May 16 alleges that John Gilbert Mendoza, Antonio Alcantara Jr., Ira Altwegg, Albert A. Alimoot Jr. and Evan M. Koizumi illegally obtained more than $400,000 from lenders after securing mortgage loans under false pretenses.

They have been charged with conspiracy to commit mail fraud, wire fraud and making false statements on loan applications. If convicted they face up to 20 years in prison.

As detailed in the indictment, the scheme allegedly involved homebuyers, home sellers, loan officers and others working together to defraud lending institutions between April 5, 2004, and July 13, 2006.

According to the indictment, buyers applied for loans they never intended to pay back, loan officers handled applications they knew were false and sellers knew proceeds from the sale would be obtained by fraud.

"These are not the last defendants in Hawai'i who will be charged with these types of crimes," Kubo said.

Nationwide, officials have identified 10 "mortgage fraud hot spots" in California, Colorado, Texas, Minnesota, Michigan, Illinois, Ohio, New York, Georgia and Florida.

To people who have committed fraud or are contemplating doing so, FBI Director Robert S. Mueller III said, "We will find you, you will be investigated and you will be prosecuted."

"The FBI will continue to direct investigative and analytic resources towards mortgage fraud and corporate securities fraud that threaten our nation's economy," Mueller said in a news release.

Banks reported nearly 53,000 cases of suspected mortgage fraud last year, up from more than 37,000 a year earlier and about 10 times the level of reports in 2001 and 2002, according to the Treasury Department's Financial Crimes Enforcement Network.

In recent months, the FBI has been investigating more than 1,400 mortgage fraud cases and 19 companies tied to the sub-prime mortgage crisis.