Wednesday, April 9, 2008

FinCEN reports 44% jump in mortgage fraud reporting

WASHINGTON (4/8/08)—The Financial Crimes Enforcement Network (FinCEN) reported a 44% increase in suspected mortgage fraud activity during the 12-month period framed in its latest review of such information.

The most recent report garnered its information from Suspicious Activity Reports (SARs), filed under requirements of the Banker Secrecy Act (BSA), between March 2006 and March 2007. It updates a November 2006 FinCEN report that reflected information filed between April 1, 1996 and March 31, 2006.

In an executive summary of its findings, FinCEN noted that in 2006, financial institutions filed 37.313 SARS citing suspected mortgage loans fraud. That 44% increase compared to 7% increase in overall SAR filings.

"One reason for this increase may be that lenders are increasingly identifying suspected fraud prior to loan approval and reporting this activity. Suspected fraud was detected prior to loan disbursements in 31% of the mortgage loan fraud SARs filed between April 1, 2006 and March 31, 2007, compared to 21% during the preceding ten years," FinCEN reported.

That agency's figures indicated that total SAR filings in 2006 on suspected mortgage loan fraud, when divided by the subject's state address, showed the greatest increases in Illinois (75.80%), California (71.29%), Florida (53.04%), Michigan (51.50%), and Arizona (48.73%).

FinCEN said the suspicious activity characterization Mortgage Loan Fraud was the third most prevalent type of suspicious activity reported, after Bank Secrecy Act/Structuring/Money Laundering and Check Fraud.

Reports of suspected identity fraud and identity theft4 associated with mortgage loan fraud continued to increase for the period reviewed. Reports of suspected identity theft in conjunction with mortgage loan fraud increased a whopping 95.62% over the previous study.

"Cases of suspected identity fraud were predominantly associated with fraud for housing. Victims of identity theft have had their properties encumbered with loans or property titles fraudulently transferred, effectively having their homes stolen," according to FinCen.

Filers specified that loans were subprime in 79 SARs (0.19%) for the reviewed period. Without this specification, it is not possible to determine whether mortgages described in the remaining SARs were subprime loans, the report noted.

"FinCEN's analysis indicates that the financial community is becoming increasingly adept at spotting and reporting suspicious activities that may indicate mortgage fraud," said FinCEN Director James H. Freis, Jr. "This exemplifies how compliance with Bank Secrecy Act regulations is consistent with a financial institution's commercial concerns."

Use the resource link below for more report details.

courtesy of

1 comment:

Joseph P. McCaffery said...

It's no surprise that Illinois tops the list of increases. Our firm alone is representing victims of mortgage fraud in Illinois on properties valued at more than $50 million.