Official: FBI Agents Going Undercover to Target Fraud in Mortgage Companies

The undercover agent may be a familiar player in drug investigations and mafia busts, but it turns out that undercover work also is under way in the FBI's campaign to fight mortgage fraud.

FBI Deputy Director John Pistole, at a hearing Friday before the House Committee on Financial Services, said that agents have been sent undercover into companies to fight fraud and stem larger economic problems.

"The FBI has implemented new and innovative methods to detect and combat mortgage fraud ... [including] undercover operations and wiretaps," Pistole said. "These investigative measures not only result in the collection of valuable evidence, they also provide an opportunity to apprehend criminals in the commission of their crimes, thus reducing loss to individuals and financial institutions."

The use of undercover agents is nothing new in the FBI's effort to combat mortgage fraud. In September 2004, the agency announced action against 205 people in a nationwide investigation of financial institution fraud that included numerous cases of mortgage fraud. Undercover agents helped build some of those cases.

But the emphasis on mortgage fraud and other financial crimes has only increased in the recent economic downturn, which has partly been blamed on criminal or careless actions in the financial sector.

Pistole said there were "several" such undercover investigations under way, though it wasn't immediately clear how they were being carried out and who was being targeted.

FOX News' Mike Levine contributed to this report.