Industry NewsMortgage

Lenders keep finding more fraud

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Federally regulated banks filed 62,084 reports of suspected mortgage fraud through mid-summer 2008 -- a 44 percent increase from the previous year and nearly 10 times the 6,401 reports filed just five years ago.Because mortgage fraud can take months or years to detect, the trend doesn't necessarily reflect the prevalence of fraud in newly originated loans, the Financial Crimes Enforcement Network (FinCEN) said in releasing a report analyzing fraud trends through June 2008.In about 34 percent of the reports, the filing institutions said they detected the attempted mortgage fraud before funding the loans -- that compares with 21 percent of the time over the past decade. These results suggest lenders "have become increasingly vigilant in trying to protect themselves from and report suspected fraud," FinCEN said.Mortgage fraud is often uncovered during housing downturns because falling home prices can expose house-flipping schemes that relied on inflated home valuations and falsi...