The Wall Street Journal noted today that the Mortgage Asset Research Institute reported that mortgage fraud increased 45% in the second quarter of 2008 even as home values were going down. The Treasury’s Financial Crimes Enforcement Network reported a similiar rise as well.

President Obama continues to insist that only “responsible families” will benefit from his foreclosure prevention program. Others feel a federal bailout of troubled loans will do nothing to discourage this trend of liar loans and it would be almost impossible to find out which homeowners to bailout.

FDIC Chairman Sheilla Bair told public radio: It would be “simply impractical” to review old mortgage applications and try to distinguish between honest and dishonest borrowers.

What are your thoughts?

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