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FinCEN report finds suspicious activity related to mortgage fraud rises four percent in 2009

Federal Reserve proposes enhanced protections and disclosures for mortgage transactions The Federal Reserve Board (FRB) has proposed enhanced consumer protections and continued on page 12

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WHO WOULD YOU TRUST WITH YOUR LIFE? BRANCH PROGRAM FOR PROFESSIONALS

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 SEPTEMBER 2010

HOPE NOW, the private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors estimates the industry has completed 1.13 million permanent loan modifications

Faith Schwartz, senior advisor for HOPE NOW. “Our data this year shows some positive trends, including a high percentage of proprietary mods that include reductions of monthly principal and interest payments. This translates into more affordable loan modifications for homeowners.” For more information, visit www.hopenow.com.

MISSOURI MORTGAGE PROFESSIONAL MAGAZINE

HOPE NOW reports: One million-plus permanent loan mods completed to date in U.S.

HOPE NOW also reports that since January of this year, mortgage delinquencies of 60 days or more past due have dropped 20 percent as of July 2010. Since HOPE NOW initiated survey data reporting (July 2007), more than 3.5 million homeowners have saved their homes via permanent loan modifications. This total reflects the combination of proprietary loan modifications plus those completed under HAMP (as reported by the U.S. Treasury). Combined with other mortgage options, such as repayment plans and forbearance, the mortgage industry has assisted almost 10.4 million homeowners since HOPE NOW was formed in 2007. “The industry continues to make progress in assisting large numbers of borrowers who are at risk of foreclosure,” said

NationalMortgageProfessional.com 

The Financial Crimes Enforcement Network (FinCEN), has released its 2009 Mortgage Loan Fraud (MLF) study which found the number of mortgage fraud suspicious activity reports (SARs) filed in 2009 grew four percent compared to the number of mortgage fraud SARs filed in 2008. FinCEN also reported that just looking at the fourth quarter of 2009, mortgage fraud SAR filings increased six percent over the same period in 2008. Consistent with recent years, nine percent of all SARs filed in 2009 indicated MLF as an activity characterization. However, looking at just the fourth quarter, this proportion rose to 11 percent. In addition to the increase in SAR MLF filings, the analysis shows an increase in the prevalence of post-origination loan reviews by a variety of mortgage market businesses other than mortgage lenders. Mortgage loan purchasers and providers of mortgage insurance, certificate insurance, or similar credit enhancement have taken an increasing role in detecting potential fraud or misrepresentations. “FinCEN is an active participant in the fight against mortgage fraud working closely with local, state and federal law enforcement, assessing potential vulnerabilities and sharing information that can lead to successful prosecutions,” said FinCEN Director James H. Freis Jr. “These numbers tell us that we must remain vigilant and continue taking action to focus resources and hold accountable perpetrators of mortgage fraud.” The report also lists where MLF SARs are most common by state by county and by metropolitan area. The following table shows the Metropolitan Statistical Areas (MSAs) with the most SAR MLF filings and the number of mortgage loan fraud SARs that were filed in 2009. The volume of SAR filings in any given period does not directly correlate to the number or timing of suspected fraudulent incidents in that period. The numbers reported show when the suspicious activity was reported even if the activity occurred prior to 2009. FinCEN’s data indicates that almost 75 percent of mortgage loan fraud SARs report suspicious activity that occurred more than one year prior to filing the SAR. Foreclosures, repurchases, insurance investigations, and enforcement actions appear in SAR narratives as contributing factors to the ultimate discovery and reporting of suspicious activities. For more information, visit www.fincen.gov.

for at-risk homeowners so far in 2010. For the month of July, the data shows the industry completed more than 120,000 proprietary loan modifications for homeowners, which closely matched the number from the previous month. As reported by U.S. Treasury Department, mortgage servicers also completed 36,695 Home Affordable Modification Program (HAMP) modifications in July. If a homeowner does not qualify for HAMP, mortgage servicers determine eligibility for a proprietary loan modification that may help a homeowner stay in their home. In fact, 86 percent of proprietary modifications completed in July reduced the monthly payment for homeowners in order to make them more sustainable.

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