WASHINGTON (7/13/12)--Mortgage loan fraud, structuring fraud and false statement fraud are among the most frequently reported crimes in title market- and escrow market-related Bank Secrecy Act (BSA) filings sent to the Financial Crimes Enforcement Network (FinCEN), the agency reported this week.
In its first comprehensive study of suspicious activity reports (SARs) and other related BSA forms filed in the title and escrow markets, the agency noted that thousands of banks, money service businesses and other financial institutions have suspected crimes were being committed at various title and escrow companies. The study covers the period between 2003 and 2011.
Title and escrow companies are not required to file SARs, but some have reported suspected crimes by employees or others on other FinCEN form 8300 payment statements that they are required to file.
Around $122 million have been reported in escrow and title firm SARs filed between 2003 and 2011. Mortgage loan fraud has been the most frequent subject of SARs reporting suspected title or escrow firm malfeasance since 2003.
California was the most frequently listed location of filers, branches, and subjects on SARs filed in the firms, and the majority of suspicious activities reported took place in Texas. Some filed SARs were also tied to business in China, Nigeria, Canada and other foreign locales.
Potential mortgage fraud also was suspected in half of the SARs filed by title and escrow companies in 2011, the agency added. The number of reports linked to potential crimes at escrow and title companies peaked in 2005 and has fallen significantly since then.
The mortgage fraud attempts often feature mortgage brokers and title, escrow or real estate agents who have helped borrowers falsify their mortgage applications by providing untrue employment, income and asset data. Identity theft and the filing of multiple mortgage loan applications for multiple properties were also commonly reported crimes, according to FinCEN.
Title or escrow agents have also reportedly taken part in predatory lending practices and colluded in property flipping schemes, FinCEN said.
BSA reports also noted attempted check fraud, check kiting, wire fraud and money laundering schemes.
This first study of BSA reports filed by and on title and escrow firms will help inform FinCEN's ongoing efforts to identify regulatory gaps that criminals look to take advantage of, and will help the agency address those gaps and mitigate those risks through public awareness, support to law enforcement, or appropriate regulatory action, FinCEN Director James Freis said.
For a FinCEN release, use the resource link.