Bringing Mortgage Fraud
Under Control:
When and How
By Dennis M. LorMeL with John J. Byrne, CAMs
IT IS CLEAR TO ALL IN THE FINANCIAL, PUBLIC POLICY,
AND LAW ENFORCEMENT SECTORS THAT MORTGAGE
FRAUD CONTRIBUTED TO THE 2009 ECONOMIC CRISIS.
Under scrutiny by the FBI, The Financial Crimes Enforcement Network (FinCEN), and
Congress through reports, enforcement actions, and new laws, the financial sector must
adjust its programs and policies to ensure detection and prevention of future financial
crimes. But with current priorities on money laundering, terrorist financing, and other
forms of illicit finance, this may not be an easy task. This article brings compliance,
security, and operational risk officers up to date on the mortgage fraud issue, with
advice on how to keep this crime in their sights.
The financial crisis has exposed a plethora of frauds. While business scandals like
Enron’s and Ponzi schemes such as those perpetrated by Madoff and Stanford have
garnered considerable attention and notoriety, mortgage fraud has grown at a consistent
and alarming annual pace. FinCEN reported on February 25, 2009, that for the year
ended June 30, 2008, 62,084 suspicious activity reports (SARs) of mortgage loan fraud
were filed—an increase of 44 percent from the prior year. On July 7, 2009, the FBI issued
its 2008 Mortgage Fraud Report (MFR); for fiscal year (FY) 2008, the agency received
63,713 mortgage fraud SARs—an increase of 36 percent from the prior year. While the
dollar loss attributable to mortgage fraud is unknown, financial institutions reported
losses of at least $1.4 billion in FY 2008, an increase of 83.4 percent over FY 2007.
BONO / BONOTOM STUDIO
