Friday
October 24, 2014

Mortgage Fraud Down, But New Schemes Arise

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Mortgage Fraud Down, But New Schemes Arise

Mortgage fraud dropped 5.6 percent in the second quarter from a year earlier, with about 0.8 percent of mortgage applications, or 19,700, identified as having a high risk of fraud, CoreLogic reports.

But how fraudsters cheat on applications may be changing. CoreLogic found that 13 percent of fraudulent mortgage applications were from applicants who misrepresented their income — a 7.5 percent jump quarter-over-quarter and the biggest increase among mortgage fraud types. 

One-fifth of fraudsters took part in property fraud risk, deliberately over- or under-valuing a home to achieve gains. Property fraud risk showed the greatest decrease in the second quarter, falling by 7.1 percent from the previous quarter.  

“Since the beginning of 2012, mortgage application fraud risk has totaled more than $30 billion nationally,” says Mark Fleming, chief economist for CoreLogic. “While the propensity toward application fraud risk has declined based on our index, as the housing market recovers, the volume of mortgage applications is rising and increasing the total amount of fraudulent mortgage loan application dollars.”

The following states had the highest year-over-year growth in mortgage fraud risk: 

  • Ohio: 30.1%
  • Hawaii: 19.6%
  • Kentucky: 16.6%
  • Connecticut: 15%
  • Alaska: 13.8%

The following five states had the highest estimated value of fraud among mortgage applications: 

  • California: $864 million 
  • New York: $278 million 
  • Florida: $273 million 
  • Texas: $261 million 
  • Virginia: $231 million

Source: CoreLogic and “Mortgage alert: Borrowers change how they cheat,” CNBC (Sept. 25, 2013) 

Read more:

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