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Suspicious Activity Related to Mortgage Fraud on the Rise: FinCEN

Despite a continued crackdown, mortgage fraud continues to be a major cause of concern within the industry.


In fact, according to the ""2009 mortgage loan fraud study"":http://www.fincen.gov/news_room/nr/html/20100730.html recently released by the ""Financial Crimes Enforcement Network"":http://www.fincen.gov/ (FinCEN), the number of mortgage fraud suspicious activity reports (SARs) filed last year edged up 4 percent compared with the number filings in 2008. And when just looking at the fourth quarter of 2009, mortgage Fraud SAR filings jumped 6 percent over the same period in 2008, FinCEN reported.

Consistent with recent years, FinCEN said 9 percent of all SARs filed in 2009 indicated mortgage loan fraud as an activity characterization. However, this proportion rose to 11 percent when looking just at the fourth quarter.


In addition to the uptick in SAR mortgage loan fraud filings, FinCEN's analysis found an increase in the prevalence of post origination loan reviews by a variety of mortgage market businesses other than mortgage lenders. FinCEN said this was the result of mortgage loan purchasers and providers of mortgage insurance, certificate insurance, or similar credit enhancements taking an expanded role in detecting potential fraud or misrepresentations.

According to FinCEN's study, mortgage loan fraud SARs were most prevalent in the Los Angeles and Miami metro areas, both of which reported more than 10,000 filings last year. The New York City metro followed close behind with 7,214 mortgage loan fraud SARs filed during the year, and Chicago came in next with 5,552. Riverside, California rounded out the top five with 3,643 mortgage loan fraud SARs filed in 2009.

""These numbers tell us that we must remain vigilant and continue taking action to focus resources and hold accountable perpetrators of mortgage fraud,"" said James H. Freis Jr., director of Vienna, Virginia-based FinCEN.

FinCEN noted that the volume of SAR filings in any given period does not directly correlate to the number or timing of suspected fraudulent incidents in that period. Rather, the numbers show when the suspicious activity was reported. FinCEN said foreclosures, repurchases, insurance investigations, and enforcement actions appear in SAR narratives as contributing factors to the ultimate discovery and reporting of suspicious activities.

About Author: Brittany Dunn


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