Foreclosure rescue scam reports increase, new study says

VIENNA, Va. – June 22, 2010 – The Financial Crimes Enforcement Network (FinCEN) released its first analysis of suspicious activity reports containing information about potential foreclosure rescue scams. The report, “Loan Modification and Foreclosure Rescue Scams – Evolving Trends and Patterns in Bank Secrecy Act Reporting,” analyzed more than 3,500 SARs filed from 2004 through 2009, with the great majority of those reports (3,000) filed last year.“The increase in reporting of suspected foreclosure rescue scam activity could mean that there is an increase in fraudulent activity, but it also reflects an increase in awareness among financial institutions of the fraud perpetrated,” said FinCEN Director James H. Freis Jr.Along with the increase in reported activity, the analysis found that the nature of foreclosure rescue scams shifted too. The latest scams reflect more advance-fee schemes, in which the alleged loan modification or foreclosure rescue specialists say they’ll arrange modification of a homeowner’s mortgage for more favorable repayment terms. Once the scammers receive large advance fees, they rarely, if ever, provide any service.A variation of the advance fee scam involves phony debt elimination programs, in which the homeowners paid advance fees and are given bogus documents or instructed to contact their lenders with specious assertions that the original mortgage debt is illegal.According to the latest FinCEN analysis, the top 10 metropolitan regions, ranked by the concentration of local subjects of all mortgage loan fraud suspicious activity reports tracked between Jan. 1, 2009 and June 10, 2010, are:Miami-Fort Lauderdale-Pompano Beach, FL, came in ranked as No. 1; Los Angeles-Long Beach-Santa Ana, CA, No. 2; New York-Northern New Jersey-Long Island, NY-NJ-PA, No. 3; Chicago-Naperville-Joliet, IL-IN-WI, No. 4; Washington-Arlington-Alexandria, DC-VA-MD-WV, No. 5; Riverside-San Bernardino-Ontario, CA, No. 6; Phoenix-Mesa-Scottsdale, AZ, No. 7; Atlanta-Sandy Springs-Marietta, GA, No. 8; San Francisco-Oakland-Fremont, CA, No. 9; and Orlando-Kissimmee, FL, No. 10.© 2010 Florida Realtors®