Mortgage Fraud was among the top trends in the filing of suspicious activity reports (SARs) involving title and escrow companies, the Financial Crimes Enforcement Network (FinCEN) announced today. Almost all SARs were filed through mandatory reporting from outside of the title and escrow business, the research finds.
FinCEN conducted a study examining criminal risks in the residential real estate market from 2003-2011 by analyzing the filing of SARs involving title and escrow companies. The study began with a goal of identifying gaps in the housing finance system that allow for criminal activity and abuse to slip through.
“This first baseline study will help inform our ongoing efforts to identify regulatory gaps that criminals look to take advantage of,” said FinCEN Director James Freis. “We can now more efficiently and effectively address those gaps and mitigate those risks through public awareness, support to law enforcement, or appropriate regulatory action.”
The study found mortgage fraud was among the top reasons for reporting suspicious activity. Banks and Money Services Businesses filing against title and escrow companies in regard to mortgage fraud accounted for thousands of cases reported. Structuring and false statement were also among the most frequent activities reported.
In the nine years over which the study was conducted, the real estate industry saw nearly 22,000 SARs and Suspicious Activity Report by Money Services Business (SAR-MSBs) forms filed. For roughly every 750 reports filed from outside the industry, one was filed by the industry itself.
The biggest trend for SARs filed on real estate and escrow-related businesses involved mortgage loan fraud. False statements were another trend in reported activities, with mortgage loan fraud accompanying more than 93% of the false statement reports.
Read the FinCEN study here.
Written by Erin Hegarty