Good News! Mortgage fraud down 25% since ‘07

Real Estate Broker/Owner with David Wain Realty, LLC

Mortgage fraud down 25% since ‘07

© 2010 Florida Realtors®

SANTA ANA, Calif. - July 14, 2010 - The CoreLogic Fraud Index shows that mortgage industry fraud risk has declined by 25 percent since peaking in the third quarter of 2007. CoreLogic says its latest reports is the first ever predictive and statistical index to look at aggregated risk compared it to other quarters in order to predict future fraud problems.

"Lenders' aggressive stance against fraud is having an impact. ... But with an estimated $14 billion in fraud losses experienced in 2009 alone, fraud is still a major issue for the mortgage industry," says Tim Grace, senior vice president of Fraud Analytics, CoreLogic. "There is evidence that fraud patterns are changing and becoming increasingly better hidden."

One finding from the report: There is a high correlation between fraud risk and subsequent default rates. For example, of the top 12 CoreLogic Fraud Index states in 2007, nine were in the top 12 default states in 2009, according to the index.

Other findings:

· Overall mortgage fraud risk, including subprime loans, has been steadily decreasing since 2006 and appears to have leveled off in 2009.


· Recognition of mortgage fraud is up in the industry overall. Lenders acknowledge the existence of fraud in their portfolios and report more fraudulent loans than in the past.


· Short sale volume from first quarter 2008 through fourth quarter 2009 increased by more than 300 percent.


· About one in every 200 short sales were deemed "very suspicious" by lenders, meaning there was a new sale transaction less than 60 days after the short sale for a selling price more than 20 percent higher.


· The most common types of fraud experienced by lenders were:


  • Income 31%
  • Identity 12.6%
  • Internal Fraud 16.8%
  • Occupancy 11.4%
  • Property 10.3%
  • Employment 8.1%
  • Undisclosed Debt 4%
  • Third Party 2.8%
  • Assets 2.7%

CoreLogic also segmented risk by fraud type and geographic region. Lenders who use the data could be less willing to lend in areas deemed high risk, which CoreLogic says it can break down by state, zip code or even street. Nationally, CoreLogic says the riskiest street for mortgage fraud is in Orlando. Miami and Orlando both ranked in the top five for risky zip codes.

© 2010 Florida Realtors®

Comments (1)

Alan Bruzee
Long & Foster Real Estate, Inc. - Rockville, MD

25% of a lot is still a lot of mortgage fraud.  With today's technology you think it would be virtually non-existent.  

Aug 16, 2010 02:17 AM