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Report Examines States Feeling Greatest Fallout from Crash

While Florida, Nevada, and California are some of the most commonly cited examples of states hit hard by the housing implosion, an analysis of fraud data submitted to LexisNexis' Mortgage Industry Data Exchange (MIDEX) shows New Jersey might have taken the worst impact.

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In its 15th Annual Mortgage Fraud Report, ""LexisNexis Risk Solutions"":http://www.lexisnexis.com/risk/ put a spotlight on three economic indicators: mortgage fraud and misrepresentation involving industry professionals, potential collusion activity, and volume of properties in default. Together, the three indicators show the full extent of the damage caused over the last few years by the housing market's crash, the company says.

Looking at mortgage loan fraud levels, researchers at LexisNexis determined that most states have seen fraud fall to normal levels since 2008, though the fallout from prior years continues to build. For example, Florida ranked No. 1 for fraud activity under investigation in 2012 with an index value of 805--more than eight times the expected level of fraud given the state's origination activity. However, when originations before 2012 were removed, the Sunshine State's index fell to 169.

For all of its improvement, however, Florida's economic prognosis still looks shaky. Despite the drop in fraud levels, the state still ranked among the top 10 for fraudulent reports in 2012, and it also placed highest for percentage of properties in default with 5.42 percent.

""This year's study suggests that the more shared problematic economic indicators a state has, the greater its financial challenges will be in the coming years,"" said Tom Brown, SVP of financial services at LexisNexis. ""With Consumer Financial Protection Bureau (CFPB) regulations going into effect in January 2014, and demanding new rules for quality loans, it will be interesting to see what impact this has on overall mortgage defaults.""

Based on Brown's suggestion, New Jersey is looking at the most trouble ahead. The Garden State ranked on all three top 10 lists for mortgage fraud and misrepresentation (with a reading of 120 for investigations and 213 for 2012 originations), potential collusion (with a reading of 233), and properties in default (3.06 percent).