Pre-2008 mortgage fraud cases continue to surface

Mortgage fraud soared during the second quarter, as debt elimination scams and cases of misrepresenting income, occupancy, or debt led the pack, the Financial Crimes Enforcement Network reports.

Another common mortgage fraud scam found in the second quarter involved fraudulently using Social Security numbers on loan documents.

Overall, mortgage loan fraud suspicious activity in the second quarter of 2011 reported by financial institutions totaled 29,558 items — up from 15,727 in the same quarter of 2010. A lot of the spike was from mortgages that had closed during the height of the real estate boom, FinCEN reported.

About 81 percent of the suspicious activity filed during the second quarter involved activities that had occurred prior to 2008.

“We’re continuing to see a large number of [suspicious activity reports] filed on activity that occurred more than two years ago, an indication that financial institutions are uncovering fraud as they sift through defaulted mortgages,” FinCEN Director James H. Freis Jr. said in a statement. “But we also continue to see indications of ongoing mortgage fraud activities.”

Other common scams for mortgage fraud included identity theft, false statements and false documents, fraud involving short sales and appraisals, forged rescission of notice of default, advance fee scams, buy and bail schemes, and money laundering, according to FinCEN’s second quarter report.