Mortgage Fraud Reports Jump 31%

June 28, 2011

Mortgage fraud reports increased 31 percent in the first quarter of this year, largely attributed to additional reviews from banks of loans issued several years ago that now have gone bad, reports The Financial Crimes Enforcement Network, a Treasury Department agency.

In the first quarter of 2011, 86 percent of the mortgage fraud reports were from activities that occurred more than two years ago.

“A substantial majority of reports involved activities which occurred in 2006-2007, an indication that the industry is slowly making its way through the most problematic mortgages,” FinCEN Director James H. Freis, Jr. said in a statement.

Overall, the agency reported 25,485 "suspicious activity reports" related to suspected mortgage fraud in the first quarter of this year. That is up from 19,420 in the same quarter of 2010.

A lot of the mortgage fraud reports had to do with fake documents and payment methods that customers and third parties submitted to lenders in trying to get their mortgage obligations eliminated, according to the agency.

California dominated the top mortgage fraud rankings, according to the agency.

Source: “FinCEN Attributes Increase in Suspicious Activity Reports Involving Mortgage Fraud to Repurchase Demands,”Financial Crimes Enforcement Network (June 28, 2011)and “U.S. Mortgage-Fraud Reports Up 31% in 1Q,”Dow Jones Newswires (June 28, 2011)