Decline in Possible Mortgage Fraud

Potential mortgage fraud on U.S. originations was 1.6 percent lower in the fourth quarter of last year than in the third quarter.

Compared to a year earlier, possible fraudulent activity on home loan originations was diminished by 3.4 percent from 2011.

The findings were based on loan applications processed through Kroll Factual Data Inc., which reported the numbers Monday.

“Any decrease in potential fraud is good news for lenders,” Kroll President Rod Bazzani said, “but when one out of four applications in various locations around the U.S. can trigger fraud alerts, lenders are well advised to continue updating, strengthening and integrating their verification and quality control methodologies throughout the entire lending cycle.”

Kroll said it examined metropolitan statistical areas where it processed at least a thousand loan applications per quarter and found that the San Francisco-Oakland, Calif., MSA saw a nearly one-third increase from the third quarter in potential fraud — more than any other area.

Not far behind was Champaign-Urbana, Ill., where potential fraud was up 31 percent.

Trenton, N.J., followed with a 27 percent rise; then just over 25 percent in Cedar Rapids, Iowa; and just under a quarter in Boise City, Inc.

At the other end of the spectrum was Barnstable-Yarmouth, Mass., where potential fraud was down 22 percent from the third quarter.

Kroll noted that it released LoanFocus, a “suite of prefunding and post-closing outsourcing services, designed to reduce potential risk by providing independent re-verifications of the applicant related documentation and information provided throughout the entire spectrum of the lending process.”