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Mortgage Fraud Up 44% in First Quarter: Report

The first three months of 2011 saw a 44 percent increase in the volume of mortgage fraud case activity, according to industry data released this week. The cases reported represent fraud on an estimated $1.2 billion in real estate loans, rising from $0.9 billion in the final period of last year.
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These are the latest findings of the first quarter ""Mortgage Fraud Index"":http://www.mortgagedaily.com/FraudIndex.asp from ""MortgageDaily.com"":http://www.mortgagedaily.com. The index is based on mortgage fraud case activity tracked at the mortgage fraud blog ""FraudBlogger.com"":http://www.fraudblogger.com/.

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The index, which climbed to 990 from 126 in the fourth quarter of 2010, was still lower than 1,144, which was recorded for the first quarter of 2010.

""We're seeing signs that repurchases are responsible for some of the latest increase,"" said MortgageDaily.com founder and publisher, Sam Garcia. ""Smaller firms that are forced to buy back loans from housing agencies or correspondent lenders are doing their own investigations and uncovering more fraudulent activity.""

Florida had the highest index at 130 followed by California and New York. California had the highest dollar amount with nearly $0.3 billion in mortgages associated with first-quarter case activity.

""The average quarterly index peaked in 2009 at 1,676 while loan delinquency also topped out that year,"" Garcia said. ""But subprime mortgage production peaked in 2005, suggesting an average lag time of around four years from when the actual fraud occurred to when the criminal case is prosecuted.""

According to Mortgage Daily, the report indicates that prosecution of mortgage fraud occurs around four years after the crime.

About Author: Heather Cernoch

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