Wednesday, December 15, 2010

FinCEN: 7% Increase in Mortgage Fraud

On December 14, 2010, the Financial Crimes Enforcement Network (FinCEN) released two mortgage fraud reports entitled Mortgage Loan Fraud SAR Filings, which together cover the first six months of 2010.

One report covers January through March 2010, and the other covers April through June 2010.

For previous announcements on this subject, please visit the Compliance ALERTS section of our Archive.

Taken together the reports show that suspicious activity reports (SARs) indicating mortgage loan fraud (MLF) climbed 7%, rising to 35,135 in the first half of 2010 compared with 32,926 in the first half of 2009.

In part, the increase is being attributed to increased attention to older loans spurred by repurchase demands.

In the first quarter of 2010, 78% of reported activities occurred more than two years prior to filing, compared with 44% in the same period of 2009, showing a continued focus on loans originated from 2006 to 2008.


First Quarter

FinCEN-SAR Filings-1Q-2010


Second Quarter

FinCEN-SAR Filings-2Q-2010


Key Findings

References to bankruptcy in SARs have steadily increased, rising to 7% of MLF SAR filings in 2010, compared to 1% in 2006 and 2007.

SAR reports referencing "short sale" and "broker price opinion" appeared 827 times and 41 times in SARs respectively during the first quarter of 2010. (Short sales and broker price opinions mentioned in SARs are sometimes associated with a particular type of flipping scheme known as "flopping." Flopping occurs when a foreclosed property is sold at an artificially low price to a straw buyer, who quickly sells the property at a higher price and pockets the difference.)


Visit Library for Issuances

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FinCEN: Suspicious Activity Report Filings from January 1-March 31, 2010, Mortgage Loan Fraud Update, December 2010
FinCEN: Suspicious Activity Report Filings from April 1-June 30, 2010, Mortgage Loan Fraud Update, December 2010


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