Falsified Applications Top New Mortgage Fraud Study

Falsified loan applications have become the primary form of mortgage fraud, according to LexisNexis Risk Solutions’ 16th Annual Mortgage Fraud Report.

The Report, which culled its data from verified fraud activity during 2013, is slated for a Monday release. According to a preview of the report published in The New York Times, 74 percent of loans investigated for fraud involved falsified application fraud, an increase from 69 percent in 2012 and 61 percent in 2011. The report defined application fraud as including misrepresented information on a borrower’s background or intentionally incorrect information regarding income, employment and owner-occupant intentions.

Credit fraud was detected in 17 percent of all reported fraud investigations in 2013, up from five percent in 2012, while appraisal fraud was in 15 percent of reported loans, its lowest level in five years.

For the fifth year in a row, Florida ranked first with the worst levels of mortgage fraud. Nevada and New Jersey followed in ndseco and third, while Utah saw the most dramatic leap to seventh place in 2013, up from 21st place in 2012.

Tim Coyle, author of this year’s Report and senior director of financial services at LexisNexis Risk Solutions, stated that the vast majority of fraud is being done with the assistance of career criminals.

“Eighty percent of all mortgage fraud involves a professional,” said “It almost has to - it’s a very complex game.”