Mortgage Daily

Published On: March 16, 2009
Mortgage Fraud WorseAround 58,800 SARs filed during 2008

March 16, 2009

By staff

Driven by economic desperation, borrowers continue to commit mortgage fraud at an increasing pace.Approximately 58,800 Suspicious Activity Reports tied to mortgage fraud were filed with the Federal Bureau of Investigation during 2008, according to the 11th Periodic Mortgage Fraud Case Report from the Mortgage Asset Research Institute. The report was presented to the Mortgage Banker’s Association today at its National Fraud Issues Conference in Las Vegas.

SARs increased from 46,700 during fiscal 2007 and reached an all-time high last year.

The data were generated from the 600 subscribers of MARI, which provides mortgage fraud prevention services. The company said its subscribers are associated with more than 80 percent of U.S. wholesale originations.

“With fewer loan originations today, the data suggests that the economic downturn may have created more desperation, causing more people than ever before to try to commit mortgage fraud,” Denise James, director of residential mortgage solutions at MARI affiliate LexisNexis Risk & Information Analytics Group, said in the statement.

More than 60 percent of all fraud incidents involved application fraud, while fraud on tax returns and financial statements was involved in 28 percent of all incidents. The next most frequent mortgage fraud incidents involved appraisals or valuations, then deposit verifications, employment verifications and escrow or closing costs.

But fraud tied to credit reports dropped to 4 percent in 2008 from 9 percent in 2007.

James said new types of mortgage fraud are emerging.

Rhode Island debuted as the No. 1 worst state for mortgage fraud. MARI said that the state had “more than three times the expected amount of reported mortgage fraud for its origination volume.” Mortgage fraud in Rhode Island was called “problematic and overlooked.”

Florida, which was the worst state in 2007, was the second-worst state last year, followed by Illinois, Georgia and Maryland.

Top 10 Worst Mortgage Fraud States

  • Rhode Island
  • Florida
  • Illinois
  • Georgia
  • Maryland
  • New York
  • Michigan
  • California
  • Missouri
  • Colorado
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