Reported incidents of mortgage fraud fell in 2011 | Blog

http://isabelamber.blog.com/2012/07/21/reported-incidents-of-mortgage-fraud-fell-in-2011/

ATLANTA — Cases of residential mortgage fraud reported by institutions in the home financing industry fell last year for the second year in a row, according to a new study.

The LexisNexis Risk Solutions Mortgage Fraud Report released Wednesday tracks verified instances of home loan fraud or misrepresentation by mortgage industry professionals, as reported by banks and other financial institutions.

The fraud could include a borrower falsifying information on loan documents but only if the borrower was conspiring with a mortgage industry professional.

The study found that mortgage fraud reports declined 35 percent between 2010 and 2011.

One factor in the decline is that mortgage loan originations sank to their lowest levels since 2001 last year, reflecting a sharp drop in sales of new and previously occupied homes.

Another is that fewer mortgage fraud schemes are taking place at the point where a buyer tries to get a home loan. Mortgage fraud involving the buying or selling of homes in some stage of foreclosure is becoming more common, according to the FBI.

Mortgage fraud investigations by the FBI resulted in 1,082 convictions in fiscal 2011, the agency has said.

Loan application and home appraisal fraud and misrepresentation made up the largest category of fraud type being investigated by lenders last year, according to the LexisNexis study.

Among the trends identified in the report: Instances where buyers and sellers potentially colluded in a home sale or purchase transaction are running at an elevated pace.

One red flag of collusion in a real estate transaction is when there is an undisclosed relationship between buyer and seller, or agent, which could potentially lead to a conflict of interest.

Unless disclosed, real estate transactions are expected to be arm’s-length, or with buyer and seller having no relationship to each other.

In 2011, lenders reported that transactions where such a relationship was not disclosed declined to 6.8 percent from 9.7 percent in 2010. In years past, that percentage has been below 5 percent, LexisNexis said.

The decline in the overall number of reported mortgage fraud cases by institutions does not necessarily mean mortgage fraud is on the wane, however.

Reports of suspected mortgage fraud activity posted an annual increase of 31 percent to 92,028 last year, according to the Financial Crimes Enforcement Network.

Still, that spike likely reflects loans made years ago. That’s because many banks investigated housing-boom era residential mortgage transactions last year for signs of fraud.

Investors have pressed banks to buy back loans made during the boom years and eventually bundled into securities. The investors claim such loans were made improperly.

Among states, Florida had the highest incidence of reported mortgage fraud, according to the LexisNexis study, followed by Nevada, Arizona, Michigan and Rhode Island.

2009 Mortgage Fraud Report “Year in Review” | Blogger

http://isabelamber.blogspot.com/2012/07/2009-mortgage-fraud-report-year-in.html

Scope Note

The purpose of this study is to provide insight into the breadth and depth of mortgage fraud crimes perpetrated against the United States and its citizens during

2009. This report updates the 2008 Mortgage Fraud Report and addresses current mortgage fraud projections, issues, and the identification of mortgage fraud “hot

spots.” The objective of this study is to provide FBI program managers with relevant data to better understand the threat, identify trends, allocate resources,

and prioritize investigations. The report was requested by the Financial Crimes Section, Criminal Investigative Division (CID), and prepared by the Financial

Crimes Intelligence Unit (FCIU), Directorate of Intelligence (DI).

This report is based on FBI, state and local law enforcement, mortgage industry, and open-source reporting. Information was also provided by other government

agencies, including the U.S. Department of Housing and Urban Development-Office of Inspector General (HUD-OIG), Federal Housing Administration (FHA), the Federal

National Mortgage Association, and the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Industry reporting was obtained from the

LexisNexis Mortgage Asset Research Institute (MARI), RealtyTrac, Inc., Mortgage Bankers Association (MBA), and Interthinx®. Some industry reporting was acquired

through open sources.

While the FBI has high confidence in all of these sources, some inconsistencies relative to the cataloging of statistics by some organizations are noted. For

example, suspicious activity reports (SARs) are cataloged according to the year in which they are submitted and the information contained within them may

describe activity that occurred in previous months or years. The geographic specificity of industry reporting varies as some companies report at the zip code

level, and others by city, region, or state. Many of the statistics provided by the external sources, including FinCEN, FHA, and HUD-OIG, are captured by fiscal

year; however, this report focuses on the calendar year findings. While these discrepancies have minimal impact on the overall findings stated in this report, we

have noted specific instances in the text where they may affect conclusions.