Second Quarter Mortgage Loan Fraud Suspicious Activity Persists

The Financial Crimes Enforcement Network (FinCEN) recently reported in its Second Quarter 2011 Analysis of mortgage loan fraud suspicious activity reports (MLF SARs) that financial institutions filed 29,558 MLF SARs in the second quarter of 2011, up from 15,727 MLF SARs reported in the same quarter of 2010.

A large majority of the MLF SARs examined in the second quarter involved mortgages closed during the height of the real estate bubble. The upward spike in second quarter MLF SAR numbers is directly attributable to mortgage repurchase demands and special filings generated by several institutions. For instance, FinCEN noted that 81 percent of the MLF SARs filed during the quarter involved suspicious activities that occurred before 2008; 63 percent involved suspicious activities that occurred four or more years ago.

The FinCEN report showed that misrepresenting income, occupancy, or debts and assets, followed by debt elimination scams and scams involving the fraudulent use of social security numbers, topped the types of suspicious activity reported by filers of MLF SARs. FinCEN examined a subset of quarterly filings that reported suspicious activity occurring within 90 days of filing to better understand the latest trends in the reporting of suspected mortgage fraud.

Other suspicious activities noted in MLF SARs include identity theft, false statements and false documents, debt elimination scams, fraud involving short sales and appraisals, forged rescission of notice of default, advance fee scams, buy and bail schemes, and money laundering.


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Posted in Compliance News.