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The Financial Crimes Enforcement Network (FinCEN) released a report that showed that subjects of mortgage loan fraud (MLF) suspicious activity reports (SARs) were the subjects of SARs related to other activities—including check fraud, securities fraud and foreign wire transfers to Nigeria—at higher rates than the overall incidence of those SAR types.
The study, Mortgage Loan Fraud Connections with Other Financial Crimes, examines the activities of people reported in depository institution SARs for mortgage loan fraud between July 2003 and June 2008, by evaluating SARs filed by money services businesses (SAR-MSB), securities brokers and dealers of insurance companies (SAR-SF) and casinos and card clubs (SAR-C).
The report said:
- Securities fraud was indentified in 23% of SAR-SFs reporting MLF subjects, compared with 16% of all SARSFs in the same five-year period.
- Approximately 70% of the examined SAR-MSBs described suspicious wire transfers by MLF subjects; 34% of those reports described transfers to foreign countries by MLF subjects. Nigeria was the most frequent reported destination of those funds, accounting for 10% of MLF subject activity reported in SAR-MSBs. In contrast, wire transfers to Nigeria reported in all SARMSBs represented only 3% of activity.
- In SAR-SFs, FinCEN found an unusually high number of reports of suspicious documents, fraudulent identifications, and forgery among MLF subjects.
- Check fraud by MLF subjects was reported in the SAR-Cs at an unusually high level—17%—compared with only 3% of all SAR-Cs during the same five-year period.
FinCEN also released Advisory FIN-2009-A001 to highlight red flags that are potential indicators of loan modification/ foreclosure rescue scams. The advisory notes the red flags only show possible indications of fraud. Some of the red flags include: a homeowner making payments to a third party other than the mortgage holder or servicer; the so-called “foreclosure specialist” charging an upfront fee; the homeowner being pressured to sign paperwork he or she did not have an opportunity to read and did not thoroughly understand; the foreclosure specialist giving a guarantee the home would be saved “no matter what”; and the foreclosure specialist falsely claiming to be affiliated with the government.
The complete Mortgage Loan Fraud report and Advisory FIN-2009-A001 are available at www.fincen.gov. If financial institutions have questions, they can call FinCEN’s Regulatory Helpline at 800-949-2732.