Reports of suspicious loan activity are down for the first time in 16 years, according to the Financial Crimes Enforcement Network, which noted that reports from banks on possible loan fraud were down 29 percent from last year, HousingWire reported May 8.
FinCEN reported that until 2012, mortgage loan fraud was the only suspicious activity report that increased every year since 1996, and that the last three years alone accounted for almost 46 percent of reports for the last decade.
In 2012, fraud-related activities — including mortgage fraud — made up 23 percent of all SARs from banks, a small decrease from 2011, HousingWire reported.
Mortgage loan fraud was one of only two of the seven fraud types that saw decreased report activity last year.
The Federal Bureau of Investigation said that insider abuse by bank officers and directors remained a factor in many loan fraud reports from the last decade. Among the most common types of fraud are submitting misrepresentations of borrowers’ income, employment, credit and occupancy.
Activities by real estate or mortgage brokers accounted for 4 percent of the total fraud, HousingWire reported. Common fraud activities among this group included submitting misrepresentations of occupancy or employment or other tactics that enabled borrowers to qualify for mortgages for which they otherwise would be ineligible.
FinCEN noted that some accountant borrowers committed mortgage loan fraud on their own behalf by providing false financial information, while some non-accountant borrowers changed information prepared by accountants in order to qualify for loans.
Loan officers constituted another category of those committing fraud.
FinCEN said banks, credit unions and savings institutions filed the majority of SARs, but that 250 of the 9,631 accountant or CPA-related SARS were filed by mortgage companies, mortgage servicers, credit card servicers and processors and other financial services institutions, HousingWire reported.