MARI report: Mortgage fraud at an all-time high MortgagePress.commortgage fraud, MARI, Mortgage Asset Research Institute, Rhode Island, Denise James, Mortgage Industry Data Exchange
Reported incidents of mortgage fraud in the U.S. are at an
all-time high and increased by 26 percent from 2007 to 2008
according to a new report released by the Mortgage Asset Research
Institute (MARI), a LexisNexis service. The 11th Periodic Mortgage
Fraud Case Report to the Mortgage Banker's Association (MBA)
examines the current state of residential mortgage fraud and
misrepresentation in the U.S. based on data submitted by MARI
subscribers.
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 mortgage fraud for its origination
volume. This is also Rhode Island's first appearance on the MARI
report Top-Ten list, indicating a problematic and overlooked
mortgage fraud problem in the state. Florida, ranked first in 2007
and 2006, dropped to second place and is followed by Illinois,
Georgia, Maryland, New York, Michigan, California, Missouri and
Colorado.
"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," said
Denise James, LexisNexis Risk and Information Analytics Group
director of residential mortgage solutions. "Not only are we seeing
traditional fraud trends, such as application fraud, but we are
also seeing new types of emerging fraud occur," said James. "It is
therefore imperative that the mortgage industry continue 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 60 percent from 17 percent of
reported frauds in 2007, to 28 percent of reported frauds in 2008.
Additional documented fraud types included, in order of volume,
frauds related to appraisals or valuations, verifications of
deposit, verifications of employment, escrow or closing costs, and
credit reports.
"MARI data shows that mortgage fraud is more prevalent today
than it was at the height of the boom in mortgage loan
originations," said John Courson, president and chief executive
officer of the Mortgage Bankers Association. "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."
The report also found that:
• After improving in 2006 and 2007, Georgia jumped from
seventh to fourth place in 2008;
• California, ranked fourth in 2007, declined to eighth in
2008;
• Maryland jumped from fifteenth in 2007 to fifth in 2008;
and
• The volume of reported frauds related to credit reports
dropped from nine percent to four percent between 2007 and
2008.
MARI provides valuable industry insight derived from its
Mortgage Industry Data Exchange (MIDEX) database, which contains an
aggregation of reported incidents of fraud and verified
misrepresentations submitted by leading mortgage industry
participants. MARI analyzes this industry data and presents reports
that depict a national composition of residential mortgage fraud
and misrepresentation to support the industry's effort in the fight
against mortgage fraud.
For more information, visit www.marisolutions.com.
