Mortgage Fraud Index Falls to Lowest Level Since 2008

The dollar volume of mortgage loans associated with fraud as well as the number of fraud cases reported have dropped to their lowest levels in three years, according to industry data released this week.
[IMAGE] The ""Mortgage Fraud Index"":http://www.mortgagedaily.com/FraudIndex.asp compiled by the online industry resource MortgageDaily.com fell 69 percent over the past year to its lowest level since early 2008.

The dollar volume of associated loans likewise dropped to a three-year low, cut by more than half over the past 12 months to $900,000, according to the site.

The index reflects the number and dollar volume of cases tracked by the mortgage fraud blog ""FraudBlogger.com"":http://www.FraudBlogger.com, and although the declining numbers are a welcome turn, MortgageDaily.com warns that ""the lull might only be temporary.""

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The volume of case activity has recently risen based on recent FraudBlogger.com entries, suggesting the upcoming first-quarter 2011 index could increase.

""The decline in the Mortgage Fraud Index itself as well as a drop in the number of cases and lower dollar volume followed the Department of Justice's launch of Operation Broken Trust,"" explained Sam Garcia, Mortgage Daily founder and publisher. ""The activity suggests that some resources might have been diverted from prosecution of real estate crimes.""

Operation Broken Trust, which occurred between August and December 2010, was the largest investment fraud sweep conducted in the United States and involved 211 cases and more than 120,000 victims who lost more than $8 billion.

According to a statement from Mortgage Daily, the Mortgage Fraud Index was 814 in the fourth quarter, falling from 2,634 a year earlier. In the first quarter of 2008, it was 713. The drop reflected a 36 percent annual reduction in the number of cases that saw activity during the period.

Looking at fraud activity at the state level, California moved to the No. 1 spot from No. 2 in the previous report. Florida, which was previously No. 1, is now No. 2. New York ranked third, followed by Pennsylvania and Virginia.