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Home | News | Foreclosure | Foreclosure-Prevention Scams Rise, Overall Mortgage Fraud Declines
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Foreclosure-Prevention Scams Rise, Overall Mortgage Fraud Declines

The Financial Crimes Enforcement Network (FinCEN) reported a 25 percent decline in mortgage loan fraud suspicious activity reports (SARs) last year. However, the organization has seen ""dramatic growth"" in the number of SARs involving foreclosure rescue scams, according to Jennifer Shasky Calvery, director of FinCEN. Overall, financial institutions reported 69,000 suspicious activities to FinCEN in 2012, down from 92,000 in 2011. While this category experienced improvement in 2012, foreclosure rescue scams appear to be on the rise. About 2,800 SARs in 2011 involved foreclosure rescue scams. In 2012, the number ticked up to 4,400.

The ""Financial Crimes Enforcement Network (FinCEN)"":http://www.fincen.gov/ reported a 25 percent decline in mortgage loan fraud suspicious activity reports (SARs) last year. However, the organization has seen ""dramatic growth"" in the number of SARs involving foreclosure rescue scams, according to Jennifer Shasky Calvery, director of FinCEN.

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Overall, financial institutions reported 69,000 suspicious activities to FinCEN in 2012, down from 92,000 in 2011.

The bulk of the decline occurred in the repurchase category, which according to FinCEN ""spiked"" in 2011.

However, while this category experienced improvement in 2012, foreclosure rescue scams appear to be on the rise. About 2,800 SARs in 2011 involved foreclosure rescue scams. In 2012, the number ticked up to 4,400.

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Shasky Calvery offers two possible explanations for the increase last year. The first involves ""scammers finding opportunity in the distressed part of the mortgage market, as opposed to new loan origination,"" she ""said"":http://www.fincen.gov/news_room/speech/pdf/20130415.pdf at a ""Mortgage Bankers Association"":http://www.mbaa.org/default.htm conference Monday.

The second possibility is that increased focus on these types of scams have led the industry to be more watchful and report these scams more readily.

FinCEN's Distressed Homeowner Initiative formed a Financial Fraud Enforcement Task Force to combat foreclosure-prevention fraud.

This type of fraud takes place when a scammer charges a fee and in return promises to prevent a distressed homeowner from falling into foreclosure. A similar scheme involves charging a fee to negotiate a loan modification on a homeowner's behalf.

Some scam-artists convince homeowners to transfer their titles into the scam-artist's name.

The year-long Distressed Homeowner Initiative uncovered $1 billion in losses to more than 73,000 fraud victims.

The FBI charged 530 individuals, 172 of whom were executives, according to FinCEN.

With a goal of gathering more insight into mortgage fraud and ultimately reducing its effects, FinCEN recently updated its suspicious activity report forms to include more categories of mortgage fraud, including reverse mortgage fraud, loan modification fraud, appraisal fraud, and foreclosure rescue fraud.

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About Author: Krista Franks Brock

Krista Franks Brock
Krista Franks Brock is a regular contributor to DSNews.com and TheMReport.com. She previously served as managing editor of DS News magazine. Prior to joining DS News, she was managing editor of Southern Distinction, a regional lifestyle magazine based in Athens, Georgia. She is currently a freelance writer and editor for various online and print publications. She holds degrees in journalism and art from the University of Georgia, where she also earned a minor in Spanish.

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