Mortgage Fraud Reportedly Spiking Before Tougher Rules Took Effect

Mortgage Fraud Reportedly Spiking Before Tougher Rules Took EffectBy at least one measure, mortgage fraud was trending higher across the country in the third quarter of 2013 before tougher lending standards took effect this year.
There was a 10.41 percent average increase throughout the country of possible fraudulent activity in loan applications between the second and third quarters of 2013, according to Kroll Factual Data, a provider of credit, risk mitigation and verification services to mortgage lenders, banks and credit unions.
The data is based on loan applications submitted to the company for review during the third quarter.
The 3Q spike in potential fraud is the third consecutive quarterly increase.
The uptrend comes just as tougher underwriting rules have taken effect this month. The U.S. Consumer Financial Protection Bureau says these new rules will help consumers when shopping for the best mortgage, and more importantly, they will ensure that the buyer is able to afford the payments on a home loan.
“Even with indications of the U.S. economy and the housing market gaining strength, we are seeing the threat of misrepresentation in mortgage applications rising,” said Rod Bazzani, President, Kroll Factual Data.  “The call for increased vigilance and processes for mitigating this risk is at a pitch not to be discounted or ignored.”
Initiating improved measures to combat fraud is becoming increasingly important for lenders, he added.
Kroll Factual Data examined metropolitan statistical areas (MSAs) with at least 1,000 loan applications per quarter.
The company isolated certain files that may contain indicators of potential mortgage origination fraud.
The top five MSAs posting quarter-over-quarter increases of potential fraud include Huntsville, AL (55.39%), Fort Collins–Loveland, CO (51.42%), Manchester, NH (40.95%), Santa Fe, NM (37.47%), and Boulder-Longmont, CO (32.29%).
Among the top 10 MSAs with decreases in potential fraud, Phoenix-Mesa, Arizona, posted a significant decrease of over 30 percent.
Source: Kroll Factual Data:
Mortgage Fraud Reportedly Spiking Before Tougher Rules Took Effect

Leave a Reply

Your email address will not be published. Required fields are marked *