Reports of mortgage fraud saw a large increase for the first quarter of the year as banks continue to look at loan documents being questioned by mortgage investors and insurers, according to the Financial Crimes Enforcement Network.

The FCEN, a bureau of the U.S. Department of Treasury, said it received 25,485 tips about possible mortgage fraud from January through March of this year. This is up 31 percent from the 19,420 tips it received last year over the same time period, the FCEN reports.

Mortgage lenders are conducting additional reviews after receiving demands to re-buy poorly preforming loans, the FCEN said.

"A substantial majority of reports involved activities which occurred 2006-2007, an indication that the industry is slowly making its way through the most problematic mortgages," said FCEN Director James Freis, Jr., adding that the organization will continue to track data related to mortgage fraud to investigate and prosecute participating parties and eliminate scams.

The top metro areas for mortgage fraud were primarily in California, with the San Jose-Sunnville-Santa Clara area topping the list, followed by the San Francisco-Oakland-Fremont area. Mortgage fraud affects the housing market by artificially inflating prices. 

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