The latest reading on mortgage fraud activity indicates that instances of suspected mortgage fraud have plummeted by 41 percent over the past year. But the year-earlier total appears to have been aberration tied to a surge in repurchase demands, and activity didn’t let up from the previous quarter. More than an estimated $7 billion in home loans were tied to the latest quarter’s activity.
U.S. financial institutions filed 220,854 Suspicious Activity Reports during the second quarter.
Filings climbed from the first quarter, when 205,301 SARs were filed. The number of reports in the second-quarter 2011 was 203,468.
The data was released Wednesday by the Financial Crimes Enforcement Network.
Included in the most-recent total were 17,476 SARs that were tied to mortgage fraud.
Filings didn’t change much from the prior quarter’s 17,651 SARs.
But reports have tumbled from a year earlier, when 29,558 SARs were filed. FinCEN, however, noted that there was a spike in activity in the first three quarters of last year primarily due to a surge in mortgage repurchase demands that prompted banks to review origination and refinancing documents.
First-half 2012 SARs filings totaled 35,127.
The share of mortgage fraud SARs filed that occurred more than two years prior tumbled to 78 percent from 87 percent in the same period during 2011. Activity that occurred at least four years prior to the filing climbed to 73 percent from 63 percent.
“However, during 2012 Q2, 56 percent of all filings also described activities starting five or more years before filing, compared to only 25 percent the previous year,” the report stated. “This increase in very dated SARs could indicate that filers are still working through the backlog of bad loans originated in the 2006-2007 housing bubble.”
Just 19 percent of second-quarter SARs involved suspected fraud that occurred within the prior year.
More than 80 percent of the latest quarter’s activity involved loan amounts less than $500,000.
An analysis of FinCEN data indicates that around $7.350 billion in mortgages were associated with second-quarter SARs filings, barely changed from $7.141 billion in the first quarter. But dollar volume has plummeted from an estimated $11.750 billion in the second-quarter 2011.
Based on the number of SARs filed, California had the most. The poor ranking reflected high activity in the metropolitan statistical areas of Los Angeles-Long Beach, Riverside-San Bernardino-Ontario and San Francisco-Oakland-Fremont.
Bolstered by the Miami-Fort Lauderdale-Pompano Beach MSA, Florida followed. New York and Illinois respectively were the third- and fourth-worst states.
The Golden State also topped the list on a per-capita basis thanks to six MSAs in the state that were ranked among the 10-worst. Next was Nevada, then Florida, Arizona and Colorado.
The report indicated that SARs related to foreclosure rescue schemes surged in the second quarter to 1,325 — putting 2012 on pace to far exceed the 2,782 SARs during all of 2011.
