The likelihood of mortgage fraud on new residential loan applications during the latest quarterly period moved higher again.
The potential for mortgage fraud during the third-quarter 2013 on U.S. home loans was an average of 10 percent higher than in the second quarter.
It was the third quarter in a row that mortgage fraud was more likely than in the previous period.
The findings were delivered by Kroll Factual Data Inc. and based on loan applications it received for review between July 1 and Sept. 30.
The mortgage service provider noted that the rise in risk comes as lenders face complying with stringent new loan quality regulations from the Consumer Financial Protection Bureau.
“The call for increased vigilance and processes for mitigating this risk is at a pitch not to be discounted or ignored,” Kroll Factual Data President Rod Bazzani said in the news release. “Implementing the appropriate measures to combat potential fraud, be it internally or via a third-party, is of critical importance for lenders.”
The National Mortgage Fraud Risk Index previously reported by Interthinx indicated that fraud risk rose 4 percent between the second and third quarters. The report from Interthinx — a Mortgage Daily advertiser — said that the risk level was up 10 percent from a year earlier.
Kroll reported that among metropolitan statistical areas with at least a thousand loan applications per quarter, Huntsville, Ala., had the biggest increase from the second quarter: 55 percent.
Fort Collins-Loveland, Colo., followed with a 51 percent jump in mortgage fraud risk.
After that was Manchester, N.H.’s, 41 percent; Santa Fe, N.M.’s., 37 percent and Boulder-Longmont, Colo.’s, 32 percent.
At the other end of the spectrum was the Phoenix-Mesa, Ariz., MSA, which saw a 30 percent decrease in the risk of mortgage fraud compared to the second quarter.
In the Interthinx report, the Fayetteville-Springdale-Rogers, Ark.-Mo., MSA had the worst increase compared to the second quarter: 31 percent.
