The crackdown on commercial mortgage fraud is heating up.

Fannie Mae confirmed for the first time an ongoing investigation into a litany of schemes that may be far more pervasive than was initially thought. The agency also listed financial losses from mortgage fraud as its top risk factor in its third-quarter earnings filing.

“We have discovered instances of multifamily lending transactions in which one or more of the parties involved engaged in mortgage fraud or possible mortgage fraud,” Fannie Mae disclosed in its filing with the Securities and Exchange Commission.

The Real Deal and other outlets have reported on Fannie and Freddie Mac’s efforts to weed out fraud in the industry. Fannie, however, has not publicly commented on the investigation.

Over the past year, the Department of Justice has targeted real estate investors for illegally inflating property valuations. By falsifying financial information, investors were able to obtain larger loans than they otherwise would have. These loans were made by private lenders and were often sold to Fannie Mae or Freddie Mac.

Some notable investors, including Boruch Drillman and Aron Puretz have already pleaded guilty for their roles in mortgage fraud schemes. More indictments and guilty pleas are expected down the line.

Fannie has also stopped doing business with some industry players who have not been charged with wrongdoing, including title insurers Riverside Abstract and Madison Title. Freddie Mac recently lifted its ban on doing deals with Meridian Capital Group, a major commercial brokerage.

The agencies have sought to tighten underwriting guidelines in the past year. Freddie has increased inspections at multifamily properties and Fannie and Freddie are moving to impose additional rules, according to the Wall Street Journal.

Fannie’s latest earnings report makes some stunning disclosures.

The agency acknowledged it did not independently verify information about borrowers provided by outside lenders. Instead, it relied on representations made by lenders about the loans they were buying.

“This exposes us to the risk that one or more of the parties involved in a transaction (such as the borrower, borrower’s attorney, sponsor, seller, broker, appraiser, property inspector, title agent, lender or servicer) will engage in fraud by misrepresenting facts about a mortgage loan,” the agency said its filing with the SEC.

Fannie also acknowledged that it has suffered losses from mortgage fraud, including “institutional fraud perpetrated by counterparties.” It did not disclose the size of those losses or the companies and properties involved.