Mortgage Fraud Suspicion Rises 88% Since Last Year

The amount of mortgage loan fraud suspicious activity reports filed in the second quarter of this year is 88 percent greater than the amount filed in the second quarter of 2010.

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Financial institutions filed 29,558 mortgage loan fraud suspicious activity reports in the second quarter of this year, up from 15,727 last year, according to a ""report"":http://www.fincen.gov/news_room/nr/files/MLF_Update_Q2_2011_508.pdf released Wednesday by the ""Financial Crimes Enforcement Network."":http://www.fincen.gov/ The report states the majority of filings involved loans stemming from the height of the real estate bubble.

Eighty-one percent of reports of suspicious activity during the second quarter of the year involve actions completed prior to 2008, and 63 percent involve actions completed at least four years ago.

""We're continuing to see a large number of [suspicious activity reports] filed on activity that occurred more than two years ago, an indication that financial institutions are uncovering fraud as they sift through defaulted mortgages,"" James H. Freis, Jr., director of the Financial Crimes Enforcement Network said.

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""But we also continue to see indications of ongoing mortgage fraud activities. FinCEN's report released today raises awareness of the common scams that homeowners and lenders may encounter when arranging or modifying home financing,"" Freis said.

In order to determine recent trends in mortgage fraud, the Financial Crimes Enforcement Network specifically examined suspicious activity reported within 90 days of the loan filing. For the quarter, 1,825 suspicious activity reports were filed within this time period.

The percentage of suspicious filings reported up to 90 days from activity date to reporting date dropped from 14 percent in the second quarter of 2010 to 6 percent in the second quarter of 2011.

Among recent suspicious activity reports, the greatest percentage â€" 30 percent â€" were reports of misrepresentation of income, occupancy, debt, and assets.

Following this category encompassing 19 percent of reports were debt elimination scams, which include fabricated documents and payment methods submitted by customers and third parties.

Social security number fraud (11 percent), short sale fraud (6 percent), and identity theft (5 percent) were the next three highest categories.

Suspicions of appraisal fraud came in last among the categories listed in the report with 4 percent of filings.

The states with the highest number of reports of suspicion were California, Florida, and New York. The highest number of reports per capita occurred in California, Florida, and Nevada.