Financial institutions filed 19,934 mortgage loan fraud (MLF) suspicious activity reports (SARs) in the third quarter of 2011, a 20 percent increase compared to the third quarter last year, when 16,567 reports were filed, according to the Financial Crimes Enforcement Network (FinCEN) report of MLF SARs.
“As housing markets look to recover, criminals persist in their efforts to prey on struggling homeowners, while financial institutions continue to uncover apparent fraud as they work through their portfolios of earlier mortgages now in default,” said FinCEN Director James H. Freis, Jr. “FinCEN will continue to monitor these reports and work closely with law enforcement to help them track illicit actors.”
The types of suspicious activity in the report included some form of loan workout or debt elimination attempt, questionable refinance or loan modification efforts by borrowers or others targeting distressed homeowners, and Social Security number discrepancies submitted in loan applications and workout requests.
In the third quarter of 2011, about 62 percent of the filings involved suspicious activities that started four or more years ago. These filings stem largely from mortgage repurchase demands and special filings generated by depository institutions related to mortgages originated in the housing boom’s height, according to the report. During the third quarter of 2010, only 24 percent of reported MLF SARs started four or more years ago.
During the same quarter, about 82 percent of reported activities occurred more than 2 years prior to the report filing, compared to 77 percent during the 2010 third quarter. Overall, about 29 percent, or 5,728 MLF SARs filed in the third quarter occurred between October 2009 and September 2011.
During both the third quarters for 2011 and 2010, 86 percent of MLF SARs involved suspicious activity amounts under $500,000.
States with the highest per capita fraud rankings were Hawaii, California, Nevada, Florida, and Delaware. Based on the number of mortgage loan fraud subjects, California, Florida, New York, Illinois, and New Jersey were the highest ranked states.
California metropolitan statistical areas topped the rankings for most MLFSAR subjects per capita, leading with San Jose-Sunnyvale-Santa Clara; Riverside-San Bernardino-Ontario; and Los Angeles-Long Beach-Santa Ana. Miami-Fort Lauderdale- Pompano Beach followed at number four, with Las Vegas-Paradise at number five.
The report also included per capita rankings of MLFSAR subjects by state and county. The top five counties were Santa Clara County, California; Honolulu County, Hawaii; Orange County, California; San Bernardino County, California; and Palm Beach County, Florida.
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