Mortgage fraud SARs connect to other crimes

March 17, 2009 – A Financial Crimes Enforcement Network report released Monday shows that those reported for suspected mortgage fraud may also be tied to other financial crimes such as check fraud, money laundering and structuring to avoid currency transaction reporting.

FinCEN Director James Freis released the report’s results during a Mortgage Bankers Association conference, where he said the number of suspicious activity reports pertaining to mortgage fraud has risen 1,411 percent between 1997 and 2005. This, he noted, compares with a 543 percent increase for SARs overall.

From SARs filed by depository institutions between July 2003 and June 2008, the report identified 156,000 mortgage fraud subjects; it found that 2,360 were reported for suspicious activity in 3,680 of the other SAR types. “Criminal actors may attempt to exploit any vulnerability to commit fraud and launder money through a range of financial institutions,” Fries said in a release regarding the report’s findings.

In addition to examining SARs filed by depository institutions, the study evaluated those filed by money services businesses (SAR-MSB), securities brokers, dealers or insurance companies (SAR-SF) and by casino and card clubs (SAR-C).

Among the report’s findings:

• Those suspected of mortgage loan fraud were most often reported participating in money laundering and structuring transactions to avoid currency transaction reporting requirements as well. These included 85 percent of SAR-MSBs, 47 percent of SAR-Cs and 28 percent of SAR-SFs.
  
  
• About 70 percent of the examined SAR-MSBs noted suspicious wire transfers, and 34 percent of those reports noted transfers to foreign countries.
  
  
• In SAR-SFs, FinCEN found an unusually high number of reports of suspicious documents, fraudulent identifications and forgery.
  
  
• Check fraud by mortgage fraud subjects was reported in the SAR-Cs at an unusually high level of 17 percent. This compares with only 3 percent of all SAR-Cs during the same five-year period.

Freis also announced a new section of the agency’s Web site (www.fincen.gov.) that will focus on FinCEN’s analysis of mortgage loan fraud. In addition, FinCEN is conducting additional analyses to examine the relationship between mortgage loan fraud and other financial fraud.

As noted, reports of mortgage fraud are on the rise. NAFCU has informational materials to help credit unions educate their members about such schemes.

For more information, click on the link below.