Mortgage Daily

Published On: February 25, 2009
Mortgage Fraud Concentrated at Few Banks62,084 SARs filed during year ended June 2008

February 25, 2009

By MortgageDaily.com staff

A new report suggests that more than half of suspected mortgage fraud activity is concentrated at just 10 financial institutions. In many cases, the institution did not learn about the fraud until the loan became a buyback.Between July 1, 2007, and June 30, 2008, nearly 900 depository institutions filed 62,084 suspicious activity reports tied to mortgage fraud with the Federal Bureau of Investigation, the Financial Crimes Enforcement Network — or FinCEN — reported today. SARs filings jumped from 43,054 during the prior 12 months and 32,329 for the year ended June 30, 2006.

SARs reflected in the report were filed on Form TD F 90-22.47 for depository institutions.

The report indicated that more than half of the filings were made by just 10 institutions, and 25 institutions accounted for 82 percent of the activity.

The share of filings where the fraud was uncovered prior to loan funding rose to 34 percent from 31 percent in the prior report, suggesting fraud prevention and quality control are becoming more effective.

Around 8 percent of SARs filed referenced a repurchase demand, suggesting the filing institution did not learn of the fraud until the buyback was requested — usually 19 months after the mortgage fraud was committed. But on filings where no repurchase was referenced, the fraud was usually uncovered in just 12 months.

Insurance claims, foreclosures and loan defaults also brought loan fraud to the surface. Some of the institutions were notified by other companies involved with the loan such as secondary market investors and mortgage insurers.

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