The Financial Crimes Enforcement Network (FinCEN) has released its full-year 2011 update of mortgage loan fraud reported suspicious activity reports (MLF SARs), which shows financial institutions submitted 92,028 MLF SARs last year, a 31% increase over the 70,472 submitted in 2010. FinCEN says the increase can primarily be attributable to mortgage repurchase demands.
Financial institutions submitted 17,050 MLF SARs in the fourth quarter of 2011, a 9% decrease in filings over the same period in 2010 when financial institutions filed 18,759 MLF SARs. FinCEN adds this was the first time since the fourth quarter of 2010 that quarterly filings of MLF SARs had fallen on a year-over-year basis.
FinCEN also credits lenders with ‘significant improvement’ in due diligence in mortgage banking – 40% of MLF SAR narratives indicated the filing institution turned down the subject's loan application, short sale request, or debt elimination attempt because of the suspected fraud reported in the SAR.
‘The FinCEN report shows we're seeing financial institutions spotting activity that appears to be fraud before it happens and, in the process, helping to prevent it,’ says FinCEN Director James H. Freis, Jr. ‘Even though we're seeing the market work through its backlog of the book of business now in default, FinCEN data is revealing possible fraud that institutions are using to help defeat scammers.’
FinCEN also released per capita rankings of MLF SARs subjects by state and by county. The top five counties ranked per capita and by MLF SAR subjects in 2011 were Santa Clara County, Calif.; Orange County, Calif.; Riverside County, Calif.; Broward County, Fla.; and, Los Angeles. The top five states ranked by per capita and by MLF SAR subjects in 2011 were California, Hawaii, Florida, Nevada, and the District of Columbia (which was counted as a state for the report).