March 12, 2014 View entire issue of ANO         Close 


Mortgage Fraud Risk Drops, Valuation Fraud Risk Steady

Lenders faced a reduced risk of mortgage fraud during the fourth quarter of 2013, yet borrowers were three times as likely to lie about occupancy on multi-unit properties compared to single-unit properties, according to the National Mortgage Fraud Risk Report released Feb. 28 by analytics firm Interthinx.

The report noted that the extremely high fraud risk for multi-unit properties (2-4 units) is not surprising because many are used as investments, and so a large proportion of applications stating that they will be owner-occupied are likely to be misrepresented.

Nationwide, the risk of occupancy fraud during the fourth quarter decreased 5 percent from the third quarter to 140 (n = 100), but rose 24 percent from the fourth quarter 2012.

For mortgage fraud risk, the index was 101 (n = 100) for the fourth quarter, down 7 percent from the previous quarter but up 2 percent from the same three-month period in 2012.

The riskiest metropolitan statistical area for mortgage fraud for the fourth quarter was Tulsa, Okla., where the fraud index increased 20 percent from last quarter to 175.

Overall, California remains the riskiest state with a fraud index of 139, down 8 percent from the third quarter.

Nationwide, the risk of valuation fraud during the fourth quarter was 101 (n = 100), little changed from the third quarter. The worst MSA for valuation fraud was Minneapolis-St. Paul-Bloomington area in Minnesota and Wisconsin, at 177. The San Jose-Sunnyvale-Santa Clara area in California jumped 41 percent from the third quarter and 95 percent from a year earlier.

View the full National Mortgage Fraud Index report.




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