4% Rise in Mortgage Loan Fraud Suspicious Activity Reports in 2010

The Financial Crimes Enforcement Network (FinCEN) announced in its report, Mortgage Loan Fraud SAR Filings In Fourth Quarter and Calendar Year 2010 that there was a 4% rise in suspicious activity reports involving mortgage fraud in 2010 over the number filed in 2009.

FinCEN's role is to identify suspicious financial activity and then work with law enforcement to investigate the issues. According to Director James H. Freis, Jr., “FinCEN remains active with law enforcement and other partner agencies to provide lead information and to identify and combat potential abuses in the mortgage market."

Mortgage fraud affects all homeowners as banks and lenders must increase pricing across the board to pay for the losses incurred due to fraud. Inflated housing prices due in part to mortgage fraud also played a role in the housing bubble, of which we are still suffering the consequences.

Much of the suspicious mortgage loan related activity was concerned with intentionally overstating income levels and home values. Bankruptcy fraud was also prevalent and increased over previous years. Two other types of mortgage related fraud that was commonly suspected in 2010 were debt elimination scams and "flopping", when a foreclosed home is sold at a below market price to a straw buyer (someone involved in the fraud), who immediately resells the home at a profit.

Read the full report here: http://www.fincen.gov/news_room/rp/files/MLF_Update_4th_Qtly_10_FINAL_508.pdf