Interthinx has released its quarterly Mortgage Fraud Risk Report, reflecting data collected in the third quarter of 2010. The report analyzes national fraud risk and indices for the four most common types of mortgage fraud risk. According to the most recent data available, trends are emerging that may indicate that “fraud for property” (that is, fraud to attain homeownership), once considered to be less dangerous than “fraud for profit,” is returning to the industry. Analysts reached this conclusion after witnessing increases in two of the four types of fraud tracked.
Additional data points highlighted by Interthinx analysts include:
►The Employment/Income and Identity Fraud Risk Indices are both up more than 20 percent over the last year, which may indicate that the incidence of so-called fraud for property is on the increase.
►A closer examination of fraud for property cases shows that there is usually a network of professional enablers involved in these transactions who encourage borrowers to lie about their qualifications or who lie on their behalf. They make a commission each time that a misrepresented loan closes. Seen from that perspective, it is clear that these frauds are committed for profit. Furthermore, since frauds for property sparked the mortgage meltdown as unqualified borrowers began to default in large numbers, it is clear that frauds for property must be identified and addressed going forward with the same urgency as frauds for profit.
►Nevada remains the state with the highest fraud risk, with a Mortgage Fraud Risk Index of 254. Its largest population center, Las Vegas, takes over as the most risky Metropolitan Statistical Area (MSA), with an index of 273. Arizona is the second riskiest state, with an index of 214; California is in third place, with an index of 190.
“In the past, lenders viewed fraud for property as a more benign type of crime than fraud for profit, but when those loans defaulted, everyone learned how dangerous this type of fraud truly is,” said Kevin Coop, president of Interthinx. “The crimes almost always include an inside party who is reaping a profit on the fraud. The industry must remain alert to shut down these schemes before loans are funded. That will go a long way toward helping our industry, and our country, recover.”
Click here to view the full Mortgage Fraud Risk Report.
For more information, visit www.interthinx.com.