Mortgage Loan Fraud Reports Up Significantly

The Financial Crimes Enforcement Network has just released its Q3 2011 report on mortgage loan fraud.

“As housing markets look to recover, criminals persist in their efforts to prey on struggling homeowners, while financial institutions continue to uncover apparent fraud as they work through their portfolios of earlier mortgages now in default,” said FinCEN Director James H. Freis, Jr. “FinCEN will continue to monitor these reports and work closely with law enforcement to help them track illicit actors.”

Mortgage loan fraud encompasses some form of loan workout or debt elimination attempt, questionable refinance or loan modification attempts by borrowers or others targeting distressed homeowners, and Social Security number discrepancies submitted in the original loan application and the workout request.

Overall the number of reports of mortgage loan fraud rose 20 percent from the same period the year before.

The states most likely to have fraudulent activity reported, per capita, are:

  1. Hawaii
  2. California
  3. Nevada
  4. Florida
  5. Delaware
  6. Arizona
  7. Illinois
  8. District of Columbia
  9. New Jersey
  10. New York

The areas with the highest amounts of reported mortgage loan fraud per capita are:

  1. San Jose-Sunnyvale-Santa Clara, CA
  2. Riverside-San Bernardino-Ontario, CA
  3. Los Angeles-Long Beach-Santa Ana, CA
  4. Miami-Fort Lauderdale-Pompano Beach, FL
  5. Las Vegas-Paradise, NV
  6. San Francisco-Oakland-Fremont, CA
  7. Tampa-St. Petersburg-Clearwater, FL
  8. Orlando-Kissimmee, FL
  9. Phoenix-Mesa-Scottsdale, AZ
  10. Milwaukee-Waukesha-West Allis, WI
  11. Chicago-Naperville-Joliet, IL-IN-WI
  12. San Diego-Carlsbad-San Marcos, CA
  13. New York-Northern New Jersey-Long Island, NY-NJ-PA
  14. Washington-Arlington-Alexandria, DC-VA-MD-WV
  15. Detroit-Warren-Livonia, MI
  16. Salt Lake City, UT
  17. Seattle-Tacoma-Bellevue, WA
  18. Sacramento–Arden-Arcade–Roseville, CA
  19. Denver-Aurora-Broomfield, CO
  20. Jacksonville, FL

Of the filings of suspicious activity there were a number of complaints about Freeman-style debt renunciations. “Freeman-style” arguments refer to specious arguments that avow that the funds were never loaned and therefore the borrower has no duty to repay the mortgage. These arguments rely on an unreasonable interpretation of Section 1-207 of the Uniform Commercial Code that has never been affirmed or supported by any court or governmental authority. – Source


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