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80% of SARs for Fraud from at Least 3 Years Prior

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Banks and credit unions filed far fewer reports of suspected mortgage fraud in the latest quarter, though year-over-year activity was up. Four out of five reports filed were on fraud that happened at least three years prior. Repurchase demands are driving a big share of the most recent filing.

The third-quarter 2011 saw 19,934 suspicious activity reports filed by financial institutions for suspected mortgage fraud and other mortgage-related crimes such as foreclosure-rescue schemes.

Reports sank from 29,558 SARs filed in the second quarter.

During the third-quarter 2010, a revised 16,567 SARs were filed.

The data was released Monday by the Financial Crimes Enforcement Network. The report was based on SARs filed between last July and September.

The agency, which is part of the Department of the Treasury, says that its “mission is to enhance U.S. national security, deter and detect criminal activity, and safeguard financial systems from abuse by promoting transparency in the U.S. and international financial systems.”

Increases or declines in SARs filings don’t necessarily reflect actual mortgage fraud activity during the quarter being reported since much of the suspected fraud happened in a prior period.

In fact, FinCEN said that nearly 32 percent of mortgage fraud SARs filed in the third quarter involved activity that started at least five years ago, while another 30 percent occurred at least four years ago and 18 percent was for mortgage fraud that happened three years prior.

“These filings, driving the continued rise in the MLF SAR numbers, stem largely from mortgage repurchase demands and special filings generated by several depository institutions related to mortgages originated in the height of the housing boom,” the report said.

Most SARs involved loan amounts totaling less than $500,000, with loans between $100,000 and $250,000 involved in well over a third of all cases.

More SARs were filed for mortgage fraud in California than any other state. Helping to drive California’s filings up was the Los Angeles-Long Beach-Santa Ana area, which ranked as the worst metropolitan statistical area.

Florida followed California, then New York, Illinois and New Jersey.

But based on a per-capita ranking, Hawaii was worst, followed by California, Nevada, Florida and Delaware. Three of the five-worst metropolitan areas were in California.

Including SARs filed for suspected crimes other than mortgage fraud, filings slipped to 200,871 from the second quarter’s 203,468 but jumped from 176,597 SARs filed in the third-quarter 2010.

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