Mortgage fraud reports skyrocket as banks carry out additional reviews

Financial institutions are slowly making their way through problematic mortgages issued during the housing boom, causing a 31 percent jump in the U.S.’ number of mortgage loan fraud or suspicious activity reports in the first quarter of 2011 compared with the same period in 2010. The number of reports rose to 25,485 from 19,420 last year, according to recent figures released by government agency, the Financial Crimes Enforcement Network.

FinCEN attributed the increase in reports to additional reviews carried out by large mortgage lenders after receiving demands to repurchase poorly performing loans. Eighty-six percent of reports in the first quarter were related to activities that occurred more than two years prior.

“A substantial majority of reports involved activities which occurred in 2006-2007, an indication that the industry is slowly making its way through the most problematic mortgages,” said FinCEN director James Freis, Jr. — Katherine Clarke