WASHINGTON (8/21/13)--The total number of mortgage fraud suspicious activity reports (SARs) filed declined by 25% between 2011 and 2012, the Financial Crimes Enforcement Network (FinCEN) reported Tuesday.
FinCEN received 69,277 mortgage loan fraud (MLF) SAR filings in 2012, and 92,561 in 2011.
The 25% decline in 2012 stands out when compared with the high rate of 2011 filings. The 2011 filings were mainly due to mortgage repurchase demands on banks, FinCEN said.
While the number of MLF SARs received by FinCEN dropped in 2012, the agency noted that SAR filings increased steadily each year between 2001 and 2011. Overall, 46% of all the mortgage fraud reports FinCEN received in the last decade were filed in 2010, 2011 and 2012. The bulk of MLF SARs, regardless of filing date, reference suspicious activity that financial institution filers believe began in 2006 and 2007, FinCEN said.
Suspicious activity is often recognized and reported years after a given loan is originated, FinCEN emphasized. Loan defaults, repurchase demands and other factors can often help uncover instances of fraud, FinCEN said. The repurchase demands seen in 2011 prompted review of mortgage loan origination and refinancing documents, where filers discovered fraud, which was then reported on SARs, FinCEn added.
Around 84% of the MLF SARs reported involved amounts below $500,000, said the FinCEN report. Foreclosure rescue scams accounted for 4,427 of the MFL SARs filed in 2012 while appraisal fraud accounted for 13% that year. Foreclosure fraud (3%), loan modification fraud (6%), and reverse mortgage fraud (less than 1%) were also reported. Most of MLF SARs (87%) filed fell into the "other" category, in which the filer described the alleged fraudulent activity but did not attempt to fit it into a pre-set category.
California led the country in per capita MLF subjects and total MLF volume. Nevada, Florida, Arizona and Washington, D.C., rounded out the top five states for mortgage fraud filings.
For the full FinCEN report, use the resource link.