The government says “yes”…for lenders, some borrowers, and of course often Uncle Sam.
The Treasury Department unit responsible for identifying fraud indicators in the financial world (FinCEN or Financial Crimes Enforcement Network) found, in a that depository financial recent 2011 update institutions reported almost 20% more suspicious activity regarding mortgage loan fraud in the 3rd quarter of 2011 than in the 3rd quarter of 2010.
FinCEN analyzed the suspicious activity reports (SARs) filed by depository financial institutions during that period of time involving mortgage loan fraud incidents. The suspicious activities involved forms of loan workout or debt elimination attempts, refinance or loan modification attempts by borrowers or others targeting distressed homeowners, and Social Security number discrepancies found in the original loan package and the workout request.
A substantial number of the suspicious activities reported, almost 62%, had been ongoing for four or more years. In comparison, the 2010 third quarter report indicated only 24% of the suspicious activities started over four years ago. The 2011 report found that, in the instances of long gaps between starting and ending dates of the suspicious activities, discovery came at least in part as the result of quality assurance reviews by the financial institutions, precipitated by law enforcement actions and financial losses incurred from nonperforming loans.
Social Security Number (SSN) discrepancies during the original loan application and workout request accounted for approximately 15 percent of recent suspicious activity reports. Included in the common detection categories for the SSN problems were quality control application reviews, fraud hotline referrals, anonymous tips, internal referrals, borrower or victim complaints, and law enforcement inquiries.