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Study finds the stain of mortgage fraud tough to wipe away
Aug 18, 2010

Communities that are currently struggling from the effects of fraudulent mortgage transactions may still be suffering years from now, according to research released by Interthinx. In its quarterly Mortgage Fraud Risk Report, Interthinx notes that six of the 10 riskiest metropolitan statistical areas (MSAs) in the nation were in the top 10 just a year ago, and all 10 of the MSAs that were at the top of the list for fraud last year are still in the top 20 today. The report analyzes national fraud risk and indices for the four most common types of mortgage fraud risk. Overall, analysts found that fraud risk increased by 12 percent, compared with the same period a year earlier. Currently, the national fraud risk index is 145. “As a result of our commitment to high-quality fraud detection and risk mitigation analytics, we are able to provide our lender clients a deeper analysis of the data that we collect,” said Kevin Coop, president of Interthinx. “The data distributed through our most recent report is designed to help lenders identify and plan for trends that will affect their risk mitigation strategies—and help assure their success.” Other findings in the quarterly report include: ►Nevada replaces Arizona as the state with the highest fraud risk, though both states have indices about 40 points greater than that of third-place California. The high indices in Nevada and Arizona are due mostly to the disproportionately high refinance risk in those states. ZIP-code-level analysis showed that the majority of the 10 riskiest ZIP codes are, not surprisingly, located within MSAs that are in the “very risky” category. However, two of the three riskiest ZIP codes are located in Chicago, which at the MSA-level has an index less than the national value. ►The identity fraud risk index had a quarter-on-quarter increase of 10 percent for the second consecutive quarter, the only type-specific fraud index to display a strong increasing trend over the last three quarters. ►The occupancy fraud risk index decreased by nine percent from the previous quarter. It fell 11 percent between the fourth quarter of 2009 and the first quarter of 2010. The Mortgage Fraud Risk Report is an Interthinx information product that the company’s team of fraud experts created. The report was prepared with input from Constance Wilson, Ann Fulmer, Shane De Zilwa, and the Interthinx analytics team. This is the fifth time the company has released its quarterly report. The information is designed to provide deeper insight into current fraud trends through analysis of the extensive pool of data the company amasses from the industry’s use of the Interthinx FraudGUARD loan-level fraud detection tool. “For lenders, the report has become a must-read because of its analysis and its relevance to their businesses,” said Mike Zwerner, senior vice president for Interthinx. “The report also serves Interthinx as a road map for product innovation on behalf of lenders. We’re keeping a close eye on the identity fraud risk index, but more important, we’ve observed and responded to the disturbing trend of the valuation fraud index with development of such products as CVM, ValueGUARD, and Interthinx Review Appraisal Services.” Click here to view a full copy of the Mortgage Fraud Risk Report. For more information, visit
Aug 18, 2010
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