Mortgage Fraud Up 20% over Last Year – CA Stays Near Top

Even as the housing market struggles to maintain upward momentum, a new report from the Financial Crimes Enforcement Network indicates that mortgage fraud complaints have risen sharply from the same period one year earlier.

According to the report, the top five states with fraud reports by per capita and in the third quarter were Hawaii, California, Nevada, Florida and Delaware.

Financial institutions filed 19,934 suspicious activity reports involving mortgage loan fraud in the three months ended Sept. 30, up from 16,567 in the same period of 2010, according to FinCEN.

Nearly 62% of the filings in the quarter involved suspicious activity that began at least four years ago. Last year that figure was at 24%. The alleged fraud mostly comes from mortgage repurchase demands and filings during the height of the housing boom.

The enforcement network found that 5,728 reports filed in the third quarter, 29% of the total, included activity that occurred between October 2009 and September 2011.

In January, President Barack Obama announced the formation of a mortgage fraud task force headed by New York Attorney General Eric Schneiderman.

The top five counties for fraud reports were Santa Clara County, Calif.; Honolulu; Orange County, Calif., San Bernardino County, Calif. and Palm Beach County, Fla.

“As housing markets look to recover, criminals persist in their efforts to prey on struggling homeowners, while financial institutions continue to uncover apparent fraud as they work through their portfolios of earlier mortgages now in default,” FinCEN Director James Freis said. “FinCEN will continue to monitor these reports and work closely with law enforcement to help them track illicit actors.”