Lenders learning to intercept more fraud.

Even as cases of mortgage fraud are on the rise, lenders are getting better at intercepting suspicious financial activity before the funds are disbursed to fraudsters, according to a study by the Financial Crimes Enforcement Network (FinCEN).

FinCEN, an agency of the Treasury Department, in April released an update to its November 2006 mortgage loan fraud assessment, which is based upon analysis of suspicious activity reports (SARs) provided by the financial industry.

The previous study examined a statistical sample of SARs reporting mort gage fraud filed between April 1996 and March 2006, while the updated study continues the analysis for reports filed through March 2007.

As compared with the previous 10 years of SAR reporting, data analysis for the most recently studied time period indicates a 50 percent increase in the number of SARs that reported intercepting the suspected fraud prior to funding a mortgage. This indicates growing vigilance and awareness in the financial community, according to Fin-CEN Director James H. Freis Jr.

"FinCEN's analysis indicates that the financial community is becoming increasingly adept at spotting and reporting suspicious activities that may indicate mortgage fraud," said Freis. "This exemplifies how compliance with Bank Secrecy Act regulations is consistent with a financial institution's commercial concerns."

FinCEN noted that finacial institutions filed 37,313 SARs citing mortgage loan fraud in 2006-a 44 percent increase from the preceding year--compared with a 7 percent overall increase of depository institution SAR filings. Analysis of the more recent data indicates that many identified trends continued, and certain suspicious activities showed marked increases.

The study noted that reports of identity theft in conjunction with mortgage fraud SARs increased 96 percent from the previous study. How ever, in 2007 the final total for mortgage fraud SARs filed was 52,868-an increase of 42 percent.

According to FinCEN's most recent data, the suspicious activity characteri zation "mortgage loan fraud" was the third-most-prevalent type of suspicious activity reported, after "Bank Secrecy Act/structuring/money laundering" and "check fraud."

"Fraud is a growing concern for all mortgage lenders, one which hurts everyone involved in the mortgageprocess--lenders and consumers alike," said MBA Chairman Kieran Quinn, CMB. "This report is the authoritative source for data on fraud perpetrated against mortgage lenders, and one which our members rely heavily on to spot trends and stay one step ahead of the fraudsters. We look forward to continuing to work with law enforcement to reduce or eliminate mortgage fraud."