A new report suggests losses from mortgage fraud could top $10 billion over the next five years.
During 2008, mortgage fraud losses are projected to reach $2.5 billion, according to a report announced yesterday from TowerGroup.
“Comparable losses will continue for several years thereafter,” the research firm stated.
TowerGroup cited a 10-year trend of rising fraud. The company reported that suspicious activity reports, or SARs, for mortgage fraud have risen 56 percent annually from 2002 to 2007. From 1996 to 2002, the annual rise in SARs was just 26 percent.
However, lumped into TowerGroup’s definition of mortgage fraud was foreclosure fraud, where delinquent borrowers are courted by firms who promise to help them avoid foreclosure but actually strip the equity from their properties and abandon them.
“Much of the growth in mortgage fraud has been due to the ever-increasing sophistication of fraudsters’ schemes to fabricate the values of mortgaged property,” TowerGroup Senior Analyst David Hamermesh said in the announcement.
Mortgage lenders are expected to spend “several hundreds of millions of dollars” during the next few years on technology that detects and prevents mortgage fraud, the Needham, Mass.-based company said. Among advancements in fraud prevention has been the pooling of data between lenders and other mortgage industry participants.
