Where Is Mortgage Fraud Risk Rising?

Florida continues to be a high-risk state for mortgage frauds according to the latest data from CoreLogic's quarterly analysis of mortgage fraud risks across the country. The CoreLogic National Mortgage Application Fraud Risk Index held steady for the fourth quarter of 2018 at 151 compared to the previous quarter. However, the index rose 10 percent compared to the same period in 2017.

The report said that while purchase applications accounted for 72 percent of all transactions in the last three quarters, origination volumes continued to decrease due to higher interest rates and seasonality in the fourth quarter.

Among the core-based statistical areas (CBSAs) covered by the report, eight of the 10 highest-risk cities were in Florida. The report noted that Miami especially had shown a "notable increase of 29 percent" in mortgage fraud risk during the quarter. In fact, the city has topped the list for three consecutive quarters. The New York-Newark-Jersey City area and Los Angeles were the only other CBSAs among the 10 most at-risk cities from mortgage fraud.

The report indicated that one of the factors that were influencing the rising mortgage fraud risk was the increase in loan application activity in "areas with relatively high delinquency." It said that such areas could be "more prone to mortgage fraud schemes such as illegal flips, bailouts, and straw buyers."

Looking at Miami specifically, the reported said that the city was showing a trend towards higher levels of purchase transactions "with layered risk factors such as LLC sellers, flips, unusual levels of property appreciation, and occupancy red flags." In fact, in some instances, the properties were being sold multiple times for cash between non-individuals with significant price increases each time before being sold to an individual and financed, the report said.

Cape Coral, Lakeland, Orlando, Tampa, North Port, and Jacksonville, were the other cities that were at a high-risk from mortgage fraud in the Sunshine State.