The update summarizes the following key findings, which include top fraud-related states, emerging schemes, and resources to help readers understand the evolving landscape.
Methodology & Trends
The index used various suspicious activity reports, enforcement actions, and industry studies to measure fraud patterns.
The December 2011 update showcased a continued uprising in fraud cases even as the housing market began to stabilize.
Top states for fraud:
California:
California continued to report high volumes of income and occupancy misrepresentation on mortgage applications. Many of these cases involved borrowers overstating earnings or misclassifying investment properties as owner-occupied to secure far better loan terms.
New York:
In New York, authorities saw a rise in forged documentation and inflated appraisals, reflecting the ongoing risks in high-value property markets.
Illinois:
Illinois experienced a noticeable increase in property-flipping schemes and straw-buyer scams, which had often linked to distressed or undervalued properties in metropolitan areas.
Michigan:
Michigan continued to struggle with foreclosure-related fraud and multiple incidents of title impersonation, both of which created complications for servicers and law enforcement.
Fraud trends:
- A high rise in short sale fraud and loan modification scams targeting distressed homeowners.
- Continued prosecution of multiple lenders and brokers involved in identity theft and falsified documentation.
- Increased scrutiny from regulators, as well as lenders, is leading to more suspicious activity filings.
Related resources:
