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Financial Institution Letters

Mortgage Loan Fraud
Industry Assessment Based on Suspicious Activity Report Analysis
FIL-4-2007
January 16, 2007


Summary: The Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) has prepared an assessment of mortgage loan fraud, which it based on its analysis of Suspicious Activity Reports (SARs). Financial institutions offering mortgage loan products may find the assessment useful. The assessment, entitled "Mortgage Loan Fraud," is available on FinCEN's Web site at http://www.fincen.gov/mortage_fraud.html.

Highlights:

  • FinCEN analyzed a sampling of SARs to identify any trends or patterns of suspected mortgage loan fraud.
  • The assessment reveals that suspected mortgage loan fraud in the United States has risen substantially in the past year.
  • Many of the SARs reviewed included more than one characterization of suspicious activity in addition to mortgage fraud. "False statement" was the most reported activity in conjunction with mortgage loan fraud, while "identity theft" was the fastest growing secondary characterization reported.
  • Mortgage brokers or correspondent lenders initiated loans in nearly 37 percent of the sample.
  • Emerging mortgage fraud schemes identified include asset rental and debt elimination fraud.
  • The assessment may be useful to law enforcement, regulatory authorities and financial institutions offering mortgage loan products.

Distribution:
FDIC-Supervised Banks (Commercial and Savings)

Suggested Routing:
Chief Executive Officer
Chief Loan Officer
Security Officer

Related Topics:
. Suspicious Activity Reports
. FFIEC white paper entitled "The Detection,
Investigation, and Deterrence of Mortgage Loan
Fraud Involving Third Parties." Refer to:
http://www.ffiec.gov/exam/3P_Mtg_Fraud_wp_oct04.pdf - PDF 1032k (PDF Help) .
. 2006 Uniform Standards of Professional Appraisal
Practice. Refer to:
http://www.fdic.gov/news/news/financial/2006/fil06053.html
.

Attachment:
None

Contact:
Examination Specialist Debra L. Stabile at
SASFIL@fdic.gov or (202) 898-3673

Printable Format:
FIL-4-2007 - PDF 38k (PDF Help)

Note:
FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site at http://www.fdic.gov/news/news/financial/2007/index.html

To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html.

Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, Room E- 1002, Arlington, VA 22226 (1-877-275-3342 or (703) 562-2200).




Last Updated 01/16/2007 communications@fdic.gov