The Mortgage Fraud Index measures the prevalence of fraudulent lending activities, including identity theft, income misrepresentation, and property flipping schemes. In 2005, the index revealed a sharp rise in suspicious mortgage activity as lenders loosened standards and investors sought higher yields.
**Key Findings from the 2005 Mortgage Fraud Index**
– States such as Florida, California and Georgia topped the list for reported fraud incidents.
– Most cases involved falsified income documentation, inflated appraisals and the use of straw buyers.
– Federal investigators initiated multiple high-profile prosecutions against mortgage brokers and loan officers involved in fraud rings.
**Trends and Contributing Factors**
Low interest rates and booming property values created an environment ripe for fraud. Lenders often failed to verify borrower information, and the secondary market eagerly purchased questionable loans. These factors, combined with lax oversight, allowed fraudulent schemes to proliferate.
**Enforcement Actions**
Regulators and law enforcement ramped up efforts to combat mortgage fraud in 2005. The FBI formed task forces to investigate multi-state schemes, while state agencies increased audits and licensing requirements for brokers. These initiatives laid the groundwork for tougher regulations in the following years.
**Internal Links and Further Reading**
Explore our [Mortgage Graveyard](https://www.mortgagedaily.com/mortgage-graveyard/) to see financial institutions that failed, and read about how subprime lending practices contributed to the crisis in our [Subprime Mortgage Crisis Analysis 2007](https://www.mortgagedaily.com/subprime-mortgage-crisis-analysis-2007/) and [Countrywide Subprime Exposure](https://www.mortgagedaily.com/countrywide-subprime-exposure/) articles.
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*Archived reporting from 2005, updated on October 12, 2025 for continuity.*
