Compliance Matters

FinCEN Reports a Decline in Mortgage Fraud SAR Filings

The number of mortgage fraud SARs FinCEN received dropped in 2012.

October 14, 2013
The Financial Crimes Enforcement Network (FinCEN) released an analysis of mortgage fraud suspicious activity report (SAR) filings in calendar year 2012.
FinCEN’s data on suspected mortgage fraud showed that reports declined 25% in 2012 (from 92,561 to 69,277) as compared with the previous year.
While the number of mortgage fraud SARs FinCEN received dropped in 2012, filings grew every year between 2001 and 2011.
The 2012 decline was likely the result of an unusual spike in mortgage fraud SAR filings during 2011, primarily due to mortgage repurchase demands on institutions.
Those repurchase demands prompted review of mortgage origination and refinancing documents, where filers discovered fraud, which was then reported on SARs. FinCEN also noted that 46% of all the mortgage fraud reports it received in the past decade were filed during the past three years (2010, 2011, and 2012).
Anticipating continued law enforcement interest in foreclosure rescue and other types of mortgage fraud, FinCEN designed the “suspicious activity” section of the new SAR to more clearly identify various types of mortgage related fraud.
While the “legacy” SAR form had one “suspicious activity” box to check for all types of mortgage fraud, the new form has five fields in the mortgage fraud category, to highlight types of activity most actionable for law enforcement: “appraisal fraud,” “foreclosure fraud,” “loan modification,” “reverse mortgage fraud,” and a field for “other” mortgage fraud, allowing filers to provide a description of the fraudulent activity.
FinCEN required all financial institutions to use the new reports as of April 1, 2013. The reports are available only electronically through FinCEN’s Bank Secrecy Act E-Filing System. FinCEN is no longer accepting legacy reports.
The “Mortgage Loan Fraud Update for Calendar Year 2013” is available at
Remittance Transfer Rule Effective Oct. 28
The Consumer Financial Protection Bureau’s (CFPB) remittance transfer regulation goes into effect on Oct. 28, 2013.
The rule was originally scheduled to take effect on Feb. 7, 2013.
The CFPB delayed the effective date while it engaged in additional rulemaking to address the disclosure of foreign taxes and recipient institution fees, and error resolution procedures when senders provide incorrect account information.
The revisions to the regulation were published in the Federal Register on May 22, 2013. For more information, read the article “Remittance Transfer Rule Takes Effect Oct. 28” in the July 2013 issue of Credit Union Magazine.
Additionally, CFPB updated its small-business guide on the remittance transfer rule to reflect the recent changes. The CFPB’s “Small Entity Compliance Guide: International Fund Transfers” is available at
For more information, visit “remittance transfers” in CUNA’s e-Guide at
CFPB Reports on Mortgage Servicing Problems
The CFPB issued a report in August detailing mortgage servicing problems at “banks and nonbanks.”
Credit unions were not specifically mentioned in the report, other than the fact that the CFPB supervises depository institutions and credit unions with total assets of more than $10 billion, and their affiliates.
The CFPB also has authority to supervise certain nonbanks, such as payday lenders, private education lenders, and mortgage companies including originators, brokers, and servicers.
The report highlighted examination work completed between November 2012 and June 2013. Problems detected by the CFPB included:
  • “Sloppy” account transfers when loans are bought and sold among servicers, causing consumers to miss payments, delay important processes, or affect the good standing of a mortgage borrower’s loan.
  • Poor payment processing, such as inadequate notice to borrowers of a change in address to send payments, resulting in late payments; excessive delays in handling the cancellation of private mort gage insurance payments, resulting in late fees; and property taxes being paid later than expected, resulting in borrowers’ inability to claim a tax deduction for the year they planned.
  • Loss mitigation mistakes such as inconsistent underwriting, long application review periods, poor procedures, and providing conflicting information to consumers can result in unnecessary foreclosures.
The CFPB found that many nonbank institutions are missing a comprehensive consumer compliance program; lacking formal policies and procedures; and have been foregoing independent consumer compliance audits.
In all cases where the CFPB found mortgage servicing problems, examiners alerted the company to its concerns, specified necessary remedial measures, and, when appropriate, opened CFPB investigations for potential enforcement actions.
CFPB’s “Supervisory Highlights– Summer 2013” is available at The bureau will continue to review the development of its supervision program and share certain key findings from its supervisory activities to help the industry limit risks to consumers and comply with federal consumer financial laws.