Mortgage Loan Fraud SARs Still Going One Way: Up

The number of mortgage fraud suspicious activity reports (“SARs”) filed last year grew four percent compared with the number of mortgage fraud SARs filed in 2008, according to a study that has just been released by the Financial Crimes Enforcement Network (“FinCEN”). FinCEN also reported that just looking at the fourth quarter of 2009, mortgage fraud SAR filings increased six percent over the same period in 2008. 

Consistent with recent years, nine percent of all SARs filed in 2009 indicated Mortgage Loan Fraud (“MLF”) as an activity characterization. However, looking at just the fourth quarter, this proportion rose to 11 percent.
 
In addition to the increase in SAR MLF filings, the analysis shows an increase in the prevalence of post-origination loan reviews by a variety of mortgage market businesses other than mortgage lenders. Mortgage loan purchasers and providers of mortgage insurance, certificate insurance, or similar credit enhancement have taken an increasing role in detecting potential fraud or misrepresentations.
 
The report also lists where MLF SARs are most common by state, county and metropolitan area. The following table shows the Metropolitan Statistical Areas with the most SAR MLF filings and the number of mortgage loan fraud SARs that were filed in 2009.
 

 
 
Foreclosures, repurchases, insurance investigations, and enforcement actions appear in SAR narratives as contributing factors to the ultimate discovery and reporting of suspicious activities, according to FinCEN.