While overall reports from banks and credit unions about suspicious financial activity have increased by 10 percent over the past year, the reports related to mortgage fraud tumbled by nearly a third. But activity still remains over-inflated compared to four years ago.
From Jan. 1 until March 31, depository institutions filed 205,301 Suspicious Activity Reports.
That wasn’t much different than the 204,043 SARs filed during the last three months of last year. The change, however, was more significant when compared to the 186,331 SARs filed in the first-quarter 2011.
The findings were described in the first-quarter Mortgage Loan Fraud Update from the Financial Crimes Enforcement Network.
Filings tied to mortgage lending fraud drifted higher to 17,651 from the fourth quarter’s 17,050.
Mortgage fraud SARs, however, showed a sharp decline from 25,485 in the first quarter of last year.
An analysis of FinCEN data by Mortgage Daily indicates that around $7.141 billion in mortgage loans were associated with first-quarter mortgage fraud SARs filings.
California had the most SARs filings of any state and the highest per-capita rate. The three-worst metropolitan statistical areas in the country — Los Angeles-Long Beach-Santa Ana, Riverside-San Bernardino-Ontario and San Jose-Sunnyvale-Santa Clara — are all part of the Golden State.
Florida ranked No. 2 by volume and No. 3 by per capita. New York’s third position by volume was trailed by Illinois.
Nevada had the second-worst per-capita rate. Arizona was No. 4 and New York was No. 5.
SARs related to mortgage fraud remained elevated compared to the fewer than 8,000 filed in the same period during 2008. But the latest reading has retreated from peak filings of 29,558 in the second-quarter 2011.
Around 44 percent of the mortgage fraud SARs filed in the first quarter were for possible crimes that occurred more than five years ago.
The five-year aging has inflated from the same time last year, when just 17 percent of SARs involved activity more than five years old. Some of the increase in reports from earlier vintages is possibly the result of smaller firms just now being hit with repurchase demands, digging into the loans and discovering and reporting the fraud.
At least 72 percent of reported fraud happened at least four years earlier.
Half of all first-quarter mortgage fraud filings were on amounts that were no more than $250,000, and the share jumped past 80 percent when additionally considering loans up to $500,000.
A sampling of the mortgage fraud SARs filings found that 21 percent involved income fraud. Occupancy fraud was identified in 19 percent of the reports, while employment fraud was suspected 15 percent of the time.
“Suspicious activity reports reported to FinCEN are a tremendous tool to flag new criminal techniques, trends and patterns,” FinCEN Director James H. Freis Jr. stated in an accompanying announcement.
Among new schemes cited in the latest report was mortgage fraud involving homeowners insurance fraud.
Another developing scheme has tenants targeting agency real-estate-owned properties to pose as long-term tenants and capitalize on the keys-for-cash program for REOs.
