Mortgage Loan Fraud: Loan Modification and Foreclosure Rescue Scams. Evolving Trends and Patterns in Bank Secrecy Act Reporting

摘要

FinCEN continues its efforts as a core participant in the fight against mortgage loan fraud with this review and analysis of BSA records, specifically SARs, filed between January 1, 2004, and December 31, 2009, that report loan modification/foreclosure rescue scams. FinCEN analysts established a sample dataset of SARs filed over the past six years. The relevant SARs in the dataset increased from 28 reports filed by depository institutions and money services businesses in 2004, to over 3,000 SARs filed in 2009 by depository institutions, money services businesses, and firms in the securities and futures industries. The SARs in the sample dataset revealed that between issuance of FinCENs April 2009 Advisory and December 31, 2009, each category of SAR filer increased its filings by over 100 percent from the entire preceding five-year period. Early reports of loan modification/foreclosure rescue scams identified subjects purporting to be loan modification or foreclosure rescue specialists. These subjects targeted financially troubled homeowners with promises of assistance. These scams involved the homeowners signing quit claim deeds,7 and resulted in loss of equity in or title to their property. The scammers used straw borrowers, who misrepresented income, employment, or occupancy,8 or provided other fraudulent information to deceive a new lender into making a new mortgage loan. The scams described in later reports in the dataset reflect an evolution into advance fee schemes, in which purported loan modification or foreclosure rescue specialists promised to arrange modification of a homeowners mortgage for more favorable repayment terms. Following receipt of large advance fees, scammers rarely, if ever, provided any service. A variation of the advance fee scam involved phony debt elimination programs in which the homeowners paid advance fees and were given bogus documents, or were instructed to contact their lenders with assertions that the original mortgage debt was illegal under various laws.