Reported incidents of mortgage fraud in the United States increased by an annual rate of 45 percent during the second quarter of 2008 - on fewer loan applications - according to a new report released today by the ""Mortgage Asset Research Institute"":http://www.marisolutions.com (MARI).
Key findings from the MARI Quarterly Fraud Report revealed that fraud most often occurs at the beginning of the loan process. More than 65 percent of fraud incidents are attributed to ""General Application Misrepresentation"" - a trend that has continued over the past two quarters, the institute said. ""General Application Misrepresentation,"" MARI said, is when information such as an incorrect name, occupancy, or asset is potentially falsified during the application process. This fraud trend is followed closely by reported misrepresentations related to income (36 percent) and employment (20 percent), MARI said.
%{=FONT-STYLE: italic}Within its Quarterly Fraud Report, MARI revealed three observations to help combat fraud:%
- Mortgage organizations need better technology tools to evaluate applications;
- More collaboration is needed between mortgage organizations; and
- Mortgage organizations need to stop suspicious loan applications early on before they go into the origination stage - the stage where most of the fraud occurs.
In addition to aggregate fraud, MARI's quarterly report tracks fraud at the state level, and for two consecutive quarters, Florida leads all states in reported mortgage fraud, followed by California and Illinois, respectively, the institute said.
The continued increase in fraudulent submissions ""is further validation that the industry's fight against mortgage fraud must remain constant and diligent,"" MARI said in its report.
The MARI Quarterly Fraud Report is based on data submitted by MARI subscribers (representing over 80 percent of the wholesale mortgages originated in the United States) on loans originated in the second quarter of this year that have since been classified as fraudulent. To access the institute's full report for Q2, ""click here"":http://www.marisolutions.com/resources-news.asp.