The number of foreclosure rescue scams reported to the Financial Crimes Enforcement Network (FinCEN) continued to increase in the second quarter of 2012, and a growing awareness of these scams may be influencing this upward trend, FinCEN said in its latest Mortgage Loan Fraud Update.
The agency said “a number of well-publicized Federal investigations, enforcement actions, reports, bulletins, and guidance” have likely increased public awareness and underscored the importance of preventing and reporting these scams.
FinCEN noted that foreclosure rescue scams often promise to aid troubled homeowners by delaying or stopping the foreclosure process. Home titles may be transferred, or payments may be made to the “foreclosure rescuer,” in many cases. “Victims may lose thousands of dollars in fabricated fees, and risk losing their homes as well,” FinCEN said.
Financial institutions filed 2,360 foreclosure rescue-related SARs in the first half of 2012. The agency forecasts that if this current pace continues, the total number of foreclosure rescue scam SARs for the calendar year will far exceed the total of 2,782 reported in 2011.
The median amount of funds reported in foreclosure scam MLF SARs was $345,000, compared to $265,500 for all second-quarter MLF SARs, FinCEN noted.
Another factor driving the increase in foreclosure rescue-related SARs may be real estate market conditions. Given some recent trends in the residential housing markets (e.g., underwater mortgages, lower turnover of existing homes, and less new home construction) there may be more opportunity for criminals to develop schemes related to existing mortgages in distress, as opposed to schemes related to new loan origination.
FinCEN recently closed a regulatory gap by issuing a final rule that requires non-bank residential mortgage lenders and originators to establish anti-money laundering programs and file SARs, as other financial institutions do. These SAR filings will augment the information available to law enforcement about suspicious activity in this sector. FinCEN’s mortgage loan fraud reports and SAR statistics are available on the Mortgage and Real Estate Fraud section of FinCEN’s website.
FinCEN’s ongoing work directly supports criminal investigations and prosecutions, including in connection with the Financial Fraud Enforcement Task Force (FFETF). President Obama created the FFETF by executive order in November 2009 to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes.