Property Valuation Fraud Rises Following Decline

02/17/2012 By: Esther Cho

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The risk for property valuation fraud rose nearly 8 percent for this fourth quarter following a period of decline, according to the Mortgage Fraud Risk Report released by Interthinx

This rise is the primary cause for areas within the New York Tri-State region to move into the high risk category, according to report. The New York Tri-State area includes the New York City metro along with the Connecticut metros of Bridgeport and New Haven and the New Jersey metros of Atlantic City and Ocean City.

The national mortgage fraud risk index also increased by 1.4 percent compared to the last quarter and 3.6 percent since a year ago.
With an index value of 247, Arizona overtook Nevada as the riskiest state. Nevada, now at number two, ranked first in this category since the first quarter of 2010. Florida is the third riskiest state for mortgage fraud and has the riskiest ZIP code in the nation, which is 33993 located in Cape Coral. California ranked

number four, and Connecticut was number five for mortgage fraud.

The states ranked as the least risky were Kansas, West Virginia, Maine, South Dakota, and Iowa.
The top five metropolitan statistics areas (MSA) at risk for mortgage fraud were Stockton, CA; Modesto, CA; Phoenix-Mesa-Scottsdale, AZ; Bakersfield, CA and Cape Coral-Fort Myers, FL.

Interthinx tracks four types of specific fraud risks: property valuation, identity, occupancy, and employment/income.

The top three MSAs for property valuation fraud were Stockton, CA; Modesta, CA and Phoenix, AZ. Property valuation fraud occurs when a property’s value is manipulated to create false equity.
MSAs at most risk for identity fraud are Miami, FL; San Jose-Sunnyvale-Santa Clara, CA and Detroit-Warren-Livonia, MI.

Risky MSAs for occupancy fraud are Palm Bay-Melbourne-Titusville, FL; Miami-Fort Lauderdale, FL and Cape Cora-Fort Myers, FL. On a national level, occupancy fraud dropped 14 percent from the last quarter.

Employment/income fraud are on higher alert in Burlington-South Burlington, VT; Ocean City, NJ and Naples-Marco Island, FL. Nationally, income/employment fraud risk shot up nearly 14 percent since a year ago and 46 percent over the past two years.

Interthinkx fraud risk indices can indicate a higher potential for default and foreclosure activity, according to the report, which points that overall, areas to watch include the New York Tri-State, Arizona, Nevada, and Florida.