Florida topped the nation in mortgage fraud for the second year running, according to a report released today by the Mortgage Asset Research Institute (MARI).
Nevada and Michigan followed in a close second and third, respectively, according to the study.
The group found that the most common type of mortgage fraud in 2007 involved fudged employment history and claimed income, the same issue prevalent a year earlier.
However, undisclosed/incorrect debts, liens, and judgments increased 50 percent from 2006 to 2007.
The second most common type of fraud involved verifications of deposit, followed by fraud tied to tax/financial statements, home appraisal fraud, and fraud involved in escrow/closing.
Fraud was also prevalent in verifications of employment and in credit reporting, revealing that no area was exempt from misrepresentation.
MARI noted that rising property values forced unqualified borrowers and prospectors to “stretch the truth” on loan applications to gain approval with the help of industry professionals who assumed endless higher values would clear up any future problems.
But as property values continue to slide, the amount of fraud that took place is becoming all too evident.
“As we began to notice last year, the stagnant and/or declining real estate markets in Florida, Nevada, and California have resulted in easier identification of mortgage fraud,” the report said.
“Borrowers unable to re-sell their property, end up becoming delinquent on their loans, unmasking the misrepresentation(s) and therefore higher rates of MIDEX reporting.”
Here are the top 10 states by level of mortgage fraud for 2007:
1. Florida
2. Nevada
3. Michigan
4. California
5. Utah
6. Georgia
7. Virginia
8. Illinois
9. New York
10. Minnesota
Virginia made its first appearance in the top ten in this year’s report, and Colorado showed the most improvement, falling to 17th from ninth a year earlier.
“Fraud is persistent. In constricting markets, fraud becomes a tool of desperation that dishonorable companies and individuals use to maintain lifestyles, livelihoods and bottom lines,” the report concluded.
(photo: johpan)
Source: thetruthaboutmortgage.com