Occupancy Fraud on the Rise Nationwide According to New Interthinx Report
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Occupancy Fraud on the Rise Nationwide According to New Interthinx Report

June 1, 2011

Interthinx has released its quarterly Mortgage Fraud Risk Report covering data collected in the first quarter of 2011. According to the most recent data available, the Occupancy Fraud Risk Index rose by 25 percent, and five Metropolitan Statistical Areas (MSAs) saw increases of more than 70 percent over last year in the Employment/Income Fraud Risk Index. The Interthinx Mortgage Fraud Risk Report, which tracks overall and type-specific mortgage fraud risk, provides an in-depth analysis of fraud risk from ZIP codes to state and national levels.
Additional data points highlighted by the Interthinx Mortgage Fraud Risk Report include:
►For the fourth consecutive quarter, Nevada is the state with the highest fraud risk, with an index value of 225 (n=100), followed by Arizona (205) and Florida (190). Hawaii jumps to fourth place, with an increase of 28 points—the largest increase for any state—while California, which contains five of the top ten riskiest MSAs, drops to fifth place.
►Many of the low-risk states in fourth-quarter 2010 experienced significant escalations in mortgage fraud risk driven by increases in occupancy fraud risk and a disproportionately large increase in employment/income fraud risk.
►Miami is now the second riskiest MSA nationwide and is experiencing a wide range of fraud risk types. It is currently in the top five in three of the four type-specific fraud risks examined: Occupancy (first), identity (fourth), and property valuation (fifth).
►Chicago continues to dominate the riskiest ZIP codes. ZIP code 60621, the riskiest ZIP code nationally for the last three quarters, falls to third place, while the adjacent 60636 ZIP code moves into first place.

“The increase in overall mortgage fraud risk in the least risky states was driven by large increases in the Occupancy and Employment/Income Fraud Risk Indices, which are up, on average, by 35 and 31 percent, respectively,” said Kevin Coop, president of Interthinx. “Risk is becoming more prevalent across the board, as evidenced by even the riskiest states seeing an average 24 percent increase in the Occupancy Fraud Risk Index. Interthinx recommends that lenders continue to adhere to strict prefunding fraud detection policies in conjunction with all compliance guidelines not only to meet regulatory requirements but also to keep fraudsters at bay.”
The Interthinx Mortgage Fraud Risk Report considers current fraud risk posed to the residential mortgage transaction by all participants, including borrowers. The Interthinx Fraud Risk Indices have proven to be leading indicators of foreclosure activity and fraud risk based predominantly on the analysis of current loan originations. The Federal Bureau of Investigation (FBI) and FinCEN reports are lagging indicators because they are derived primarily from Suspicious Activity Reports (SARs), the majority of which are filed after the loans have closed. The time lag between origination and the SAR report can be several years. For this reason, the Interthinx Fraud Risk Indices’ top geographies and type-specific findings may differ from FBI, FinCEN, and other fraud reports.
 

Originations, Residential, Settlement, Trends