In December 2011, Mortgage Daily’s very own Fraud Index had highlighted the prevalence of mortgage fraud across the United States. This was done by monitoring suspicious activity reports, enforcement actions, and industry studies.
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:
