A new government report on mortgage fraud indicates that post-origination reviews by parties other than the lender have grown. More than two-thirds of mortgage fraud reports were filed by institutions overseen by one federal regulator.
The number of suspicious activity reports related to mortgage fraud edged up 4 percent from 2008 to 67,507 last year, according to the 2009 Mortgage Loan Fraud report from the Financial Crimes Enforcement Network Friday. Mortgage fraud was involved in 9 percent of all 2009 SARs.
FinCEN says its mission is to enhance U.S. national security, detect and prevent criminal activity and safeguard financial systems from abuse.
During just the fourth quarter, mortgage fraud SARs were up 6 percent from a year earlier to 18,884 and accounted for 11 percent of all SARs.
The report indicated that post-origination reviews by parties other than the lender have increased. Among the other parties who have stepped up fraud detection are loan purchasers and mortgage insurance providers.
California had the most mortgage fraud SARs filed last year: 26,201. Florida’s 18,320 followed, then New York’s 5,620, Illinois’ 5,610 and Arizona’s 3,949. With just 23 filings, North Dakota had the fewest.
At 10,656 filings, the Los Angeles-Long Beach-Santa Ana metropolitan statistical area saw more SARs related to mortgage fraud than any other area. Miami-Fort Lauderdale-Pompano Beach’s 10,089 wasn’t far behind.
No. 3 New York-Northern New Jersey-Long Island (New York, New Jersey and Pennsylvania) had 7,214 filings, followed by Chicago-Naperville-Joliet’s 5,552 and Riverside-San Bernardino-Ontario, Calif.’s, 3,643.
More than three-quarters of last year’s SARs filings were made at least a year after the fraud occurred, while more than a quarter were filed at least three years after the acts.
References to repurchase demands have grown to 9,158 of all mortgage fraud SARs in 2009 from just 1,791 in 2005. In 2008, the total was 7,910.
Around two-thirds of last year’s mortgage fraud SARs were between $100,000 and $500,000. Fraud by borrowers was involved in almost half of last year’s activity, while brokers were subjects in about 10 percent. Appraisers were subjects in 5 percent of last year’s mortgage fraud activity.
FinCEN said 69 percent of all mortgage fraud SARs last year were filed by financial institutions regulated by the Office of the Comptroller of the Currency.