FinCEN: Mortgage Fraud Activity Up 4% says Report

NewImage.jpgThe number of mortgage fraud suspicious activity reports (SARs) filed in 2009 grew 4% from the previous year according to the Financial Crimes Enforcement Network (FinCEN).  During the fourth quarter of 2009, the number of filings increased 6% over the same period in 2008 said the agency.

“FinCEN is an active participant in the fight against mortgage fraud working closely with local, state and federal law enforcement, assessing potential vulnerabilities and sharing information that can lead to successful prosecutions,” said FinCEN Director James H. Freis, Jr. “These numbers tell us that we must remain vigilant and continue taking action to focus resources and hold accountable perpetrators of mortgage fraud.”

In addition to the increase in filings, the analysis shows an increase in the prevalence of post origination loan reviews by a variety of mortgage market businesses other than mortgage lenders. Mortgage loan purchasers and providers of mortgage insurance, certificate insurance, or similar credit enhancement have taken an increasing role in detecting potential fraud or misrepresentations.

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The city of Los Angeles saw the most reports filed during 2009 with 10,656, followed by Miami with 10,089 and New York with 7,214 during the year.  For a list of the top 10 metropolitan areas see here.

In April, FinCEN said it would begin to track reverse mortgage fraud occurrences in the SARs as public reports of financial crimes involving the HECM program have become more prevalent.

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  • Raw numbers rarely put anything into perspective. There are three answers which might make this informaiton meaningful. One, what is the ratio of complaints to homes owned by the residents in each of these areas? Two, how many of these compliants relate to laws that became effective within 2009 and 2010? Finally, how much of the increase is the result of increased public awareness?

    While the third question may be difficult to answer, the first two should not be. So while the number of complaints in LA/Orange Counties may look high at over 10,500 when compared to just over 3,000 for Riverside and San Bernardino Counties, raw estimated population numbers make their ratios about the same.

    Make no mistake about, law without sufficient enforcement is at times worse than no law at all. Law enforcement may need to be more diligent; however, until there is more meaningful information about these numbers, any permanent chages to reallocating resources because of what appears to be systematic problems seems premature.

  • Raw numbers rarely put anything into perspective. There are three answers which might make this informaiton meaningful. One, what is the ratio of complaints to homes owned by the residents in each of these areas? Two, how many of these compliants relate to laws that became effective within 2009 and 2010? Finally, how much of the increase is the result of increased public awareness?rnrnWhile the third question may be difficult to answer, the first two should not be. So while the number of complaints in LA/Orange Counties may look high at over 10,500 when compared to just over 3,000 for Riverside and San Bernardino Counties, raw estimated population numbers make their ratios about the same.rnrnMake no mistake about, law without sufficient enforcement is at times worse than no law at all. Law enforcement may need to be more diligent; however, until there is more meaningful information about these numbers, any permanent chages to reallocating resources because of what appears to be systematic problems seems premature. rn

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