Suspected Mortgage Fraud Continues to Rise, But at Slower Pace

Suspicious activity reports (SARs) involving fraud across the financial industry rose from 1.32 million in fiscal 2010 to 1.45 million in fiscal 2011, according to the latest annual report from the Financial Crimes Enforcement Network (FinCEN), based in Vienna, Virginia.



The mortgage industry is in keeping with this trend, though the pace of increase has been slowing over the past few years, according to FinCEN.

FinCEN reported in June that mortgage fraud SARs had risen 31 percent from the first quarter of 2010 to the first
quarter of 2011. However, 86 percent of these reports concerned actions that took place more than two years prior.

FinCEN says this trend is the result of mortgage lenders reviewing loans on which they received repurchase demands.

Mortgage SARs in the second quarter of 2011 were also higher than their year-ago levels, having risen from 15,727 to 29,558.

FinCEN reported the most common types of suspicious activity reported included misrepresentations of income, occupancy, and debts and assets.

Debt elimination scams and fraudulent use of Social Security numbers were also common.

Mortgage SARs reports have also increasingly referenced bankruptcy, according to FinCEN.

Commercial real estate SARs have been on the rise, having nearly tripled between 2007 and 2010.

“Analysis of SARs shows that non-bank mortgage lenders and originators initiated many of the mortgages that were associated with SAR filings,” stated the FinCEN report.