RENEE MONTAGNE, Host:
It's MORNING EDITION from NPR News. I'm Renee Montagne.
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The FBI is examining 14 financial institutions. NPR's Dina Temple-Raston reports from the city where mortgage fraud may be the worst.
DINA TEMPLE: Here's the sound you probably most associate with Las Vegas:
UNIDENTIFIED WOMAN: Cocktail?
TEMPLE: Law enforcement officials fear it is fast emerging as the mortgage fraud capital of America. Supervisoy Special Agent Scott Hunter heads up the FBI's Las Vegas white-collar crime unit. He says he's been fielding dozens of calls a week about possible mortgage fraud.
MONTAGNE: I think this is only the tip of the iceberg. I think not just here in Las Vegas, I think all around the country. It's all on the rise in drastic numbers. One of the local detectives that I work with quite a bit in this stuff said that they used to get a complaint a month and now they get several complaints a day.
TEMPLE: The practice has wreaked havoc on Las Vegas because when foreclosures pop up in a neighborhood, all property values suffer. Jim DePalma of Loan Servicing Solutions is one of the people trying to refinance some of the subprime loans in Vegas. He says a recovery is years away.
MONTAGNE: Depending on your perspective, another two to three years of pain until this inventory can be absorbed and the markets can stabilize again.
TEMPLE: So we're driving around in your car now and we're actually looking for houses that are foreclosed in more the northwest part of Las Vegas?
TEMPLE: McCormick is the founder and owner of Astoria Homes. I chose him as my guide because he dodged the mortgage fraud bullet but not allowing investors to come in and buy up his homes in bulk.
MONTAGNE: When this whole thing started, we had the experience of people walking in out of the blue - it just surprised us. This was like, back in 2005 - and offering to buy 10 homes. And we've never sold 10 homes to people. And we knew that the 10 homes would be this - obviously no one's going to live in 10 homes, so we'd have a bunch of rentals.
TEMPLE: A house someone bought for $300,000 was suddenly worth $270,000. McCormick and I pull into a gated community in northwestern Las Vegas.
MONTAGNE: This is the neighborhood, and this is different than what I expected.
TEMPLE: Different because we aren't driving among small, boarded-up houses. We are cruising a narrow street lined with $700,000 homes. They are two- and three-story hacienda style residences with leaded glass in the front doors and paver driveways. We make a left on a street called Walkashon(ph). What we see is stunning. Nearly every house has a for-sale sign staked in the front yard. McCormick drives by slowly.
MONTAGNE: Here's one that says foreclosure. It says bank-owned properties up to 40 percent below market value. And there's a Web site, bankfallouts.com. Across the street is one that says, well, the phone number is 456-REPO.
TEMPLE: Dina Temple-Raston, NPR News.
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