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Mortgage broker, originator and banker criminal cases. Real estate flipping and appraisal fraud. Mortgage fraud prevention, studies and analysis.

Mortgage Fraud Prosecution Activity Up

Mortgage Fraud Index 880 in Q1 2013

June 17, 2013

By Mortgage Daily staff

index by statehistorical index data

Federal, state and local prosecutors picked up the quarterly pace of activity in mortgage fraud cases -- though actions were still low based on standards established since the financial crisis.

At 880, the Mortgage Fraud Index for the first quarter increased 16 percent from the fourth quarter of last year. The index reflects prosecution activity in cases where defendants are accused of deceiving mortgage lenders.

The index, which is determined utilizing both the number of cases and the dollar amount of each case, has tumbled by nearly a quarter from the same period during 2012.

In addition, since the second-quarter 2008, the Mortgage Fraud Index has only been lower during two quarters.

Activity was tracked on 125 mortgage fraud cases, climbing 19 percent from the previous period's case count but improving 27 percent from the first-quarter 2012.

While most cases are criminal, some civil cases are tracked.

The dollar amount of home loans involved in first-quarter activity was $1.4 billion, rising $157 million from the final three months of last year. Dollar volume has retreated, however, by $339 million when compared to the first three months of last year.

Index by Quarter
Period U.S. Index
Loan Amounts
# Cases
Q1 2013 880 $1,411,583,521 125
Q4 2012 758 $1,254,832,325 105
Q1 2012 1151 $1,751,061,769 171

A preliminary review of second-quarter data indicates that the fraud index is likely to hold at first-quarter levels.

The highest state index was in California: 107. The Golden State, which moved up from the second spot in the prior period, has wiggled in an out of the No. 1 position over the past year and has been among the four-worst states since the second-quarter 2009.

The cumulative total for all state indices equals the national index.

Father and son Surjit Singh and Rajeshwar Singh were among California defendants with first-quarter case activity. The Singhs, along with Anita Sharma, were charged in a $2 million case.

Also in California, Joel Blanford, a former sales representative for defunct subprime lender Long Beach Mortgage, was sentenced to more than 30 months in prison for defrauding his former employer in order to earn more than $3 million in commissions.

Florida's index moved to No. 2 from No. 1 in the fourth quarter. Florida has ranked in the top two positions since the second-quarter 2009 and has maintained at least a No. 4 standing since the Mortgage Fraud Index was launched in 2006.

Based on the dollar amount of mortgages involved, Pennsylvania's $226 million was the highest of all states. The state has rarely been among the 10-worst states since late 2011.

Pennsylvania was impacted by a huge $100 million case involving more than a dozen defendants that saw indictments, convictions and sentencings during the first quarter.

California, which does regularly rank among the top few in the dollar category, landed the No. 2 position, followed by Florida, Nevada and New York.

Top States by Index Level
California 107 $223,927,333
Florida 93 $197,095,302
New Jersey 67 $94,900,000
Ohio 63 $50,595,740
Pennsylvania 60 $225,550,000
New York 47 $99,722,406
Texas 47 $78,674,678
South Carolina 37 $54,612,000
Nevada 33 $138,000,000
Massachusetts 30 $8,635,000

In Ohio, two appraisers -- Laura Habre George and Jeff Sadler -- were among four defendants convicted in a $1 million fraud scheme victimizing Wells Fargo.

Minnesota real estate broker Sheri Lynn Delich avoided a prison sentence for her role in a $4.3 million mortgage fraud scheme involving the Cloud 9 Sky Flats condominiums. Delich was sentenced to five years' probation.

Diane Hathaway, a retired justice for the Michigan Supreme Court, pled guilty to short sale fraud in January.

Mortgage Fraud Index through Q1 2013
Mortgage Fraud Index Q1 2013 Dollar Amount

index by statehistorical index data

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