WASHINGTON (6/27/12)--The total number of mortgage loan fraud suspicious activity reports (MLF SARs) filed with the Financial Crimes Enforcement Network (FinCEN) again declined, with financial institutions filing 31% fewer MLF SARs in the first quarter of 2012 than they did in the first quarter of 2011.
A total of 17,651 MLF SARs were filed in the first quarter of 2012. Nearly 25,500 were filed in the first quarter of 2011, according to FinCEN. The recent MLF SAR high of 29,558 was achieved in the second quarter of 2011, and the number of MLF SARs appears to have declined steadily since then. However, FinCEN Director James Freis earlier this year had said it was too soon to call this decline a trend.
Eighty two percent of the MLF SARs filed in the first quarter of 2012 related to activities that occurred more than two years before they were filed, and 72% occurred more than four years before the SAR was filed. Nearly half of the MLF SARs related to suspicious activities that began more than five years ago.
"This increase in very dated SARs could indicate that filers are still working through the backlog of bad loans originated in the 2006-2007 housing bubble," FinCEN said.
States that were hardest hit by the mortgage mess were among those that filed the highest number of MLF SARs during the quarter. Financial institutions in California, Nevada and Florida led the way in MLF SAR filings.
Forty-one percent of suspicious transactions were reported and stopped before they could be completed, and Freis said SARs remain "a tremendous tool to flag new criminal techniques, trends, and patterns, and to help identify and hold accountable those involved in organized and repeated criminal schemes."
Just over one-in-five of the fraud attempts reported in the first quarter of 2012 involved instances in which borrowers overstated their total income on finance forms. FinCEN also noted that fraudulent debt elimination schemes accounted for 14% of MLF SARs filed during the quarter, a five percentage point increase over the 9% total reported in 2011's first quarter. The number of appraisal fraud schemes reported fell to 3% during the quarter, a decrease from the 12% total reported in the first quarter of 2011.
FinCEN also detected some patterns in the suspicious activity reports. Certain mortgage and debt relief scammers were named several separate times in various MLF SARs, and several foreclosure rescue scams continued to falsely claim affiliation with the banks that serviced a given borrower's mortgage. The MLF SARs also uncovered a scheme in which a real estate professional shopped for more than one dozen short-sale properties using identical proof of funds documents and purchase agreements.
For the full FinCEN report, use the resource link.