RESTON, Va. – Mortgage fraud perpetrated by insiders has leaped significantly, according to one new analysis, which says such fraud was up 42% during the first quarter of the year.
The analysis, from the Mortgage Asset Research Institute, an anti-fraud software vendor that is a unit of ChoicePoint, said nearly a quarter of all insider mortgage fraud has occurred in Florida, with California accounting for 10% of fraud claims. Other states high on the list of insider mortgage fraud include Illinois, Maryland, and Michigan, each with 7%. The data is based on investigations by the company’s customers.
The reported incidents of fraud "all involved a professional somewhere in the loan process, whether it was the originator, the underwriter or the loan processor," Jennifer Butts, the director of operations at the institute, told American Banker, an affiliate of Credit Union Journal. The report does not include incidents of consumer fraud in which a borrower inflated his or her income or otherwise falsified information.
The type of fraud varied by state. In Maryland, 69% of fraud claims result from misrepresentations on tax returns and financial statements, the institute found. In Michigan, 38% of fraud claims involved misrepresentation of a borrower's assets or debt. Borrowers in California and Illinois reported higher incidences of employment misrepresentation, while Florida and Maryland reported more income misrepresentation.
Fannie Mae this month said it plans to quadruple its review of defaults for "fraud or improper lending practices," to 4,000 a month, by the end of the year, focusing on alternative-A mortgages. The government-sponsored enterprise also said it is expanding its "quality-control reviews for targeted products and practices" and that it is "on track to double" its antifraud investigations this year.
