More fraud activity was reported during 2006, according to preliminary data provided to MortgageDaily.com. Georgia was removed from a list of the 10 worst states.
As of today, the number of reports in 2006 alleging fraud in loans is “significantly higher” than the 2005 reports at this time last year, Jim Croft, founder of the Mortgage Asset Research Institute, told MortgageDaily.com.
Actual numbers and certain details, including subprime loan fraud incidences, could not be released because MARI is set to issue a formal annual report of U.S. residential mortgage fraud and misrepresentation to the Mortgage Bankers Association next month. The annual reports to MBA are based on information that major mortgage lenders, agencies and insurers submit to MARI’s central database, Mortgage Industry Data Exchange.
But Croft confirmed that preliminary data show Utah led the nation in loans originated last year that contained alleged fraud or serious misrepresentation. The Beehive State had the second-highest rate of fraud in 2005 and has been within the top four fraud states every year since 2001, according to previous data.
Croft also said California remains within the top 10 fraud states after being off for a few years due to its high appreciation masking fraud. Last year’s report showed the Golden State at No. 8.
The “big story,” however, is that Georgia has dropped out of the top 10 after being one of leading fraud states for a while, Croft said, adding that the annual report will chronicle what the state did to improve the quality of loans and lower incidence of fraud.
