Mortgage Loan Fraud SARs Continue To Climb, FinCEN Reports

A report released today by the Financial Crimes Enforcement Network (“FinCEN”) shows a continuing increase in suspicious activity related to possible mortgage loan fraud. Overall, the report shows that in the third quarter of 2009, depository institution filers submitted 15,697 mortgage loan fraud (“MLF”) suspicious activity reports (“SARs”), a 7.5 percent increase over the same period in 2008. 

In addition, 35 percent of the SARs examined in the report indicated an amount of $100,000 to $250,000 and an additional 32 percent of these SARs filed involved suspected amounts of $250,000 up to $500,000. Five percent of these SARs were for suspected amounts of $1 million or more.
 
The report also showed that although subjects of MLF SARs filed in the third quarter 2009 by depository institutions primarily were borrowers, filers also reported industry insiders as subjects, including loan officers, underwriters, and purported loan modification agents.
 
SARs involving loan modifications described potential fraud in either the application for the loan modification, or in the older loan which came under review subsequent to the modification application.
 
An increasing number of filers submitted SARs noting suspicious activity in connection with actual or purported foreclosure rescue specialists. Credit card processors noted multiple transaction charge-backs in accounts held by clients later determined to be loan modification or foreclosure rescue specialists, after homeowners complained that the specialist failed to deliver services.