As if this month's regulatory changes weren't enough, lenders have another problem to grapple with: According to stats released by ""Kroll Factual Data"":https://www.krollfactualdata.com/, incidents of potential mortgage fraud are on the rise.[IMAGE]
Between the second and third quarters of 2013, the company recorded a 10.4 percent average increase in ""possible fraudulent activity"" in loan applications submitted for review.
The increase was the third straight quarterly uptick, the company says.
""Even with indications of the U.S. economy and the housing market gaining strength, we are seeing the threat [COLUMN_BREAK]
of misrepresentation in mortgage applications rising,"" said Rod Bazzani, president of Kroll Factual Data. ""The call for increased vigilance and processes for mitigating this risk is at a pitch not to be discounted or ignored.""
Given the findings, Bazzani says ""[i]mplementing the appropriate measures to combat potential fraud ... is of critical importance for lenders.""
Changes in potentially fraudulent activity weren't concentrated in any geographical region. Out of all metropolitan statistical areas (MSAs) that saw at least 1,000 loan applications throughout the quarter, Huntsville, Alabama, posted the largest quarterly increase in potential fraud at 55.4 percent.
Following that were Fort Collins-Loveland, Colorado (+51.4 percent); Manchester, New Hampshire (+41.0 percent); Santa Fe, New Mexico (+37.5 percent); and Boulder-Longmont, Colorado (+32.3 percent).
On the other hand, some of the recovery's hottest markets experienced decreases in possible fraud.
Out of the most active areas, Arizona's Phoenix-Mesa market reported the largest drop: 30.1 percent. Trailing that were Wichita, Kansas (-26.8 percent); Peoria-Pekin, Illinois (-19.4 percent); Greenville-Spartanburg-Anderson, South Carolina (-18.7 percent); and Bloomington-Normal, Illinois (-9.7 percent).