FBI Seeks Broker Fraud Report Mandate

The U.S. government, which is fighting a rising tide of mortgage fraud cases, is pushing for regulations that would require loan brokers to report suspicious activity in the origination process.At a press briefing at FBI headquarters in Washington May 4, government officials said suspicious activity reports, or SARs, are only filed by federally insured or regulated financial institutions because loan brokers do not have to comply with the Bank Secrecy Act. The agency said it is talking to trade groups about the broker reporting issue. At the briefing, the FBI released a top-10 ranking of mortgage fraud "hot spots." States on the list include California, Florida, Georgia, Illinois, Nevada, and five others. The agency said SARs filings increased by 147% in 2004 to 17,127 instances of suspected fraud. In 2004 there were 241 indictments or guilty pleas in regard to mortgage fraud, compared with 174 the year before. Currently, the FBI has 642 open cases of mortgage fraud, compared with 436 in 2003. (See the May 9 issue of National Mortgage News for more details.)