The Financial Crimes Enforcement Network reported a 25 percent drop in mortgage loan fraud suspicious activity reports in 2012, marking the first year since FinCEN began reporting mortgage fraud statistics in 2001 that the number of reports dropped, according to FinCEN’s mortgage fraud analysis released Aug. 20.
FinCEN’s data showed that reports on suspected mortgage fraud declined from 92,561 reported during calendar year 2011 to 69,277 in 2012. According to the report, 57 percent of SARs received during 2012 reported mortgage loan fraud activities that started more than five years before the SAR was actually filed.
The majority of FinCEN’s mortgage loan fraud SARs, regardless of filing date, referenced suspicious activity that began in calendar years 2006 and 2007. The data showed there was an “extraordinary concentration” of suspicious mortgage origination activity that started in 2006 and 2007 leading up to the housing crisis in 2008.The report said depository institutions filed 37,457 SARs in 2006 and 52,862 in 2007.
“At the time, those numbers represented huge increases over previous years, but they seriously underrepresented the amount of suspicious mortgage fraud activity that could have potentially been reported in those years if the suspicious activity had been detected closer to loan origination,” FinCEN stated in a news release accompanying the report.
The report noted that, while the number of SARs received by FinCEN dropped in 2012, filings grew every year between 2001 and 2011. An unusually high spike in SARs in 2011 was attributed to mortgage repurchase demands on banks.
Read FinCEN’s 2012 Mortgage Loan Update.