Mortgage Fraud Reaches All-Time High

The ""Mortgage Asset Research Institute"":http://www.marisolutions.com (MARI), a ""LexisNexis"":http://www.lexisnexis.com service, released a new report at the Mortgage Bankers Association's (MBA's) National Fraud Issues Conference in Las Vegas on Monday. The organization's 11th Periodic Mortgage Fraud Case Report, showed that incidents of mortgage fraud in the United States are at an all-time high and increased by 26 percent from 2007 to 2008.
The report found that, for the first time, Rhode Island ranked first in the country for mortgage fraud, with more than three times the expected amount of reported fraud for its origination volume. This is also Rhode Island’s first appearance on the MARI report's top-ten list, indicating a problematic and overlooked mortgage fraud problem in the state.
Florida, which ranked first in 2007 and 2006, dropped to second place last year. The state with the third highest mortgage fraud rate was Illinois, followed by Georgia, Maryland, New York, Michigan, California, Missouri, and Colorado.
Denise James, director of residential mortgage solutions at LexisNexis, commented, ""With fewer loan originations today, the data suggests that the economic downturn may have created more desperation, causing more people than ever before to try to commit mortgage fraud.
James added, ""Not only are we seeing traditional fraud trends, such as application fraud, but we are also seeing new types of emerging fraud occur."" This fact, James said, makes it imperative for the mortgage industry to share information and insights, and collaborate in the fight against mortgage fraud.
The top fraud incident type in 2008 - representing 61 percent of all reported frauds - was application fraud, the fifth year in a row it topped the list. Second were frauds related to tax returns and financial statements which jumped from 17 percent of reported frauds in 2007 to 28 percent in 2008. Additional documented fraud types included frauds related to appraisals or valuations, verifications of deposit, verifications of employment, escrow or closing costs, and credit reports.
John Courson, president and CEO of the ""MBA"":http://www.mortgagebankers.org, said, ""MARI data shows that mortgage fraud is more prevalent today than it was at the height of the boom in mortgage loan originations. This report is essential reading for mortgage bankers who need to understand where mortgage fraud is coming from, what to watch for, and how to protect our companies and communities.""