UPDATE 1-FDIC's Bair says gears up for mortgage fraud cases

(Adds Bair comments on Obama housing plan)

By Karey Wutkowski

WASHINGTON, March 3 (Reuters) - The head of the Federal Deposit Insurance Corp said on Tuesday that the agency is pursuing more than 100 home mortgage fraud cases, and is investigating some 4,000 more.

FDIC Chairman Sheila Bair said its professional liability group, which handles claims in connection with failed banks, is gearing up for a surge in civil cases against mortgage brokers and other third parties that defrauded lenders.

"Cracking down on mortgage fraud in particular is a safety and soundness issue for both the banking industry and the housing markets," Bair told the National Association of Attorneys General.

Bair also said she's seeing a thaw in resistance to President Barack Obama's foreclosure mitigation plan, which is being launched on Wednesday.

"Even some investors are starting to soften up, even senior bondholders who were pockets of resistance at the start," she said.

The Obama administration's $275 billion housing plan would allow up to 4 million borrowers facing foreclosure to get their payments reduced through modifications jointly paid for by lenders and the U.S. Treasury.

An additional 5 million who cannot qualify for conventional refinancing because their home values have dropped could refinance through housing finance companies Fannie Mae FNM.N and Freddie Mac FRE.N.

Previous broad loan modification efforts have been thwarted by servicers and investors in pools of mortgage loans, who have not been convinced that modifications would financially benefit them more than foreclosures.

Bair said on Tuesday that Obama's plan has the right economic incentives to make it work.

"I do think servicers are ready for this," she said. "More generally I think Wall Street understands everybody's got to contribute."

Regarding mortgage fraud, Bair said the FDIC's inspector general has brought hundreds of criminal cases and is aggressively pursuing more that are related to mortgage lending.

She said the inspector general has nearly 180 active cases. About 40 percent of those cases are mortgage fraud related, involving potential losses of $7.5 billion.

"That's big money," Bair said. (Reporting by Karey Wutkowski; Editing by Phil Berlowitz and Gerald E. McCormick)