Suspicious activity reports involving potential mortgage fraud declined 31% in the first quarter of 2012 to 17,651 from 25,485 in the year-ago quarter, according to a report from the Financial Crimes Enforcement Network.
FinCEN reported an “unusual spike” in filings from the first to third quarters of 2011, due largely to mortgage repurchase demands on banks. Those demands prompted a review of mortgage loan origination and refinancing documents, where fraud was often discovered and then reported on SARs. This trend continues, though diminished, as 72% of 1Q filings still report suspicious activity that occurred more than four years ago.
In addition, 19% of 1Q 2012 mortgage loan fraud SARs reported activity that occurred within the past two years. Of this recent activity, there were spikes in debt elimination schemes (14% of filings in 1Q 2012 versus 9% in 1Q 2011) and other foreclosure rescue scams (8% in 1Q 2012 compared to 2% in 1Q 2011).
California and Florida still lead the nation in the number of mortgage loan suspicious activity reports, coming in first and third, respectively. Nevada has moved up to second place from fifth place last year.
Of the 50 most populous metropolitan statistical areas ranked by the number of MLF SAR subjects reported, the top nine are located in those three states, with Los Angeles ranked first in the nation. California’s Riverside and San Jose areas took second and third, with Las Vegas coming in fourth and Miami coming in fifth.
Similar to results from 2011, 41% of first-quarter 2012 transactions were reported and stopped before their completion, which the report says indicates “increased awareness and vigilance of financial professionals.”
