In second quarter 2011 there was an increase in U.S. mortgage-fraud reports, which were fueled by a wave of lawsuits from investors of mortgage-backed securities that are resulting in lenders reviewing loans, the Associated Press reported September 28, 2011.
The Treasury Department’s Financial Crimes Enforcement Network received 29,558 reports, or tips, of possible mortgage fraud in the second quarter, up from 15,727 reports in the second quarter of 2010. The network enforces the legislation that requires banks to report questionable transactions to the government, also including illegal money transfers and money laundering.
A report released by the network found that 81 percent of the “suspicious activity reports” filed involved mortgages that were signed prior to 2008, while 63 percent targeted mortgages from at least four years ago. Network Director James H. Freis said the fact that the loans in question are older is "an indication that financial institutions are uncovering fraud as they sift through defaulted mortgages."
The most common suspicious activity reports filed included fake documentation reports, debt-elimination scams and scams that involved fraudulent Social Security numbers.