Mortgage fraud may dominate the headlines, but its actual frequency is declining for the first time in a decade, a new report shows
Mortgage fraud has seen a massive decrease, a new report has revealed.
Data released by the Financial Crimes Enforcement Network (FinCEN) shows that mortgage loan fraud dropped 25% in 2012 compared to the previous year. The result marks the first time since FinCEN began reporting on mortage fraud in 2001 that the incidence of fraud fell.
In spite of the decline, FinCEN did not suggest that the days of consumers reporting mortgage fraud were over. Rather, the organization said the drop was likely due to a massive spike in mortgage frauds in 2011.
"[This was] primarily due to mortgage repurchase demands on banks. Those repurchase demands prompted review of mortgage loan origination and refinancing documents, where filers discovered fraud, which was then reported on SARs [Suspicious Activity Reports]," FinCEN's report said.
The organization also pointed out that 46% of all mortgage fraud reports it received during the past decade were filed during the last three years.
But this doesn't mean that mortgage fraud is an ongoing common occurrence, FinCEN indicated.
"The bulk of [mortgage loan fraud] SARs, regardless of filing date, reference suspicious activity that filers believe began in calendar years 2006 and 2007. This is because most mortgage fraud SARs address fraud that occurred during loan origination, and 2006 and 2007 were the final years of the U.S. housing bubble and related loan origination. FinCEN believes that much of this origination fraud was discovered and reported in subsequent years due to repurchase requests," FinCEN said.
