“(The mortgage lenders) knew the bad credit quality of the loans being originated, they took their profits, and now the ship sinks,” said Bob Simpson, president of Investors Mortgage Asset Recovery Co. in Irvine. “They will all walk away rich. And we are left with neighborhoods full of foreclosures.”

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“Borrowers don’t have the savvy to know which documents to falsify. They’re often coached by loan officers or brokers,” says Robert Simpson, president of IMARC, a Newport Beach (Calif.) mortgage-fraud investigator. Banks are starting to realize that this puts them at risk. “Banks used to say that a certain amount of fraud is the cost of doing business. Not anymore. It’s costing them a lot of money, and they’re finally going after it,” says Simpson.

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