Real Estate: South Florida's still a national leader in mortgage fraud

South Florida remains a national hub for mortgage fraud, as a new federal report shows the region led the nation in reports of suspicious activity in the third quarter of 2010.

BY TOLUSE OLORUNNIPA

TOLORUNNIPA@MIAMIHERALD.COM

South Florida's mortgage market had the nation's highest number of suspicious activity reports in the third quarter of 2010, according to the Financial Crimes Enforcement Network's third-quarter mortgage fraud report released Thursday.

Miami-Dade, Broward and Palm Beach counties logged 3,039 reports of questionable mortgage loan activity between July and September, about 33 per day, and more than any other metropolitan area in the nation. Florida's 5,404 suspicious activity reports, or SARs, during that time period ranked it second in the nation, behind California. On a per capita basis, Florida ranks ahead of California.

Miami-Dade County had the lion's share of South Florida's fraud reports, with 1,784 in the third quarter, second only to Los Angeles County, which had 1,967.

Jonathan Heller, a Miami defense lawyer defending a client who he believes was a victim of mortgage fraud, said he is not surprised by South Florida's ranking.

``When you have mortgage brokers who are unsavory, who are fueled by irresponsible lenders, it's like the perfect storm,'' he said.

Nationwide, there were 16,693 suspicious activity reports in the third quarter of 2010, up 2 percent from the same period in 2009. Florida was responsible for 32.3 percent of the nation's mortgage loan fraud reports that quarter, the report found.

The top types of mortgage fraud reported were false statements, debt elimination scams, identity theft and money laundering.

Most reports of mortgage loan fraud occur more than two years after the original loan was made. Of Miami-Dade's 1,784 reports logged in the third quarter of last year, only 404 involved loans made after Jan. 1, 2008.

That is consistent with the national trend, as those reporting fraud are focusing more on older incidents.

In the third quarter, 76 percent of SARs occurred before 2008, compared to 54 percent in 2009.

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