Mortgage Fraud Cases Creep Upward

The Treasury reports that mortgage fraud was up 5 percent last year; the amount of money in retirement plans is cresting; and the country's largest banks will receive a wrist-slap for robo-signing.

By Dees Stribling, Contributing Editor

The U.S. Department of the Treasury reported this week that “suspicious activity reports” relating to mortgage fraud were up 5 percent between 2009 and 2010. All together there were 70,472 such reports last year, up from 67,507 the year before. The odds of being arrested for such goings-on are still fairly slim, however. Since last summer, there have been 485 arrests involving 1,215 criminal defendants in mortgage fraud cases, with a recovery of about $147 million in losses, according to the U.S. Department of Justice.

By contrast, reported incidents of “mortgage fraud and misrepresentation” by professionals in the U.S. mortgage industry have decreased from 2009 to 2010, according to a separate report released this week by the LexisNexis Mortgage Asset Research Institute. Reports of mortgage industry fraud that were submitted to the institute dropped 41 percent from 2009 to 2010, the first time in several years there was a decrease, which the institute chalked up to lower mortgage volumes, not an outbreak of honesty.

The difference between its numbers and the Treasury’s, according to the institute, is in part because Treasury is reporting some cases that are a few years old, but only now coming to light. The institute reports fraud and misrepresentation based on data submitted by LexisNexis Mortgage Asset Research Institute subscribers during the year in question.

In any case, Florida ranked number one in mortgage skullduggery in 2010, same as in 2009, according to the institute. The state has just over three times the expected amount of reported mortgage fraud and misrepresentation for its origination volume. New York remained in second place, followed by California in third in 2010.

Retirement accounts hit record high

Fidelity Investments, which specializes in retirement plans, reported this week that U.S. 401(k) retirement plans have reached their highest average balances since the company began tracking them in the late 1990s: $74,900 as of the end of 1Q11. That’s an increase of 12 percent compared with the same quarter in 2010 and a whopping 58 percent compared with 1Q09.

And savers aren’t letting up, either. About 10 percent of workers who have 401(k)s increased their savings rate during the first quarter of this year, according to Fidelity. That’s the largest rate of savings increase since before the recession. On average, workers with 401(k)s save about 8.2 percent of their salaries.

Some of the average balance increase has probably been because of the appreciation in the stock market since its trough in 2009, but that’s not the only factor. Apparently future retirees don’t like what they see down the road and are squirreling away funds with both hands.

How much of a wrist-slap for robo-signing?

How much will the country’s largest banks pay to settle charges of robo-signing by federal and state officials? The Wall Street Journal reported this week that the banks are pushing for a collective penalty of $5 billion, instead of the $20 billion figure that’s been floated in recent months.

Just for comparison, the top five banks in the U.S.–Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc., Wells Fargo & Co., and HSBC North America Holdings Inc.–have between them total assets of about $7.9 trillion, and total deposits of $3.75 trillion (according to data complied by SNL Financial in March). A billion or so for each of the large banks might be a blip on a quarterly revenue statement in that context, but maybe not rise to the level of “punishment.”