Interthinx
has released its annual Mortgage
Fraud Risk Report, which highlights some of the most
significant mortgage fraud risk trends based on analysis of loan
applications processed in 2011 by the Interthinx FraudGUARD®
system. According to the annual
report, the Employment/Income Fraud Risk Index rose 14 percent
during 2011 and has been on an upward trend for more than two years for
a total increase of more than 45 percent. The Employment/Income Fraud
Risk Index is particularly high for investor loans with an index of 310,
which is almost three times the overall index value of 111 and is
highest for high-value properties.
More detailed points highlighted by Interthinx analysts include the
following:
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The fraud hot spots for 2011 are very similar to those observed in
2010. The top six states with the highest overall levels of mortgage
fraud risk in 2010 were again the riskiest six states in 2011.
Mortgage fraud risk remained consistent from 2010 to 2011 in the
Metropolitan Statistical Areas (MSAs) as well, with 16 of the 20
riskiest MSAs repeated from the previous year. This alarming degree of
persistence suggests that it is going to be a long road back for these
MSAs and states. They are all experiencing high levels of foreclosure
activity, and the predominant mortgage fraud schemes center on
distressed borrowers and properties.
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Nevada has the highest mortgage fraud risk in the nation, with a risk
index value at 245, which is 99 points higher than the national
mortgage fraud risk index of 146. Over the last eight years, Nevada
has experienced a cycle of fraud leading to an artificial boom
followed by a devastating bust resulting in the largest house price
declines, unemployment rates, and foreclosure rates in the nation.
High fraud risk, associated in particular with foreclosure and short
sale schemes, contributed to Nevada retaining its position as the
state with the highest mortgage fraud risk in the country for the
third consecutive year.
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The entire Chicago MSA saw a dramatic decrease in high-risk
transactions in 2011, with its risk index value falling from 174 in
the first quarter to 146 in the fourth quarter. Increased media and
lender scrutiny of fraud in these geographies may have played a role
in this dramatic change.
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Five of the six New England states experienced large changes in fraud
risk between 2010 and 2011.