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Interthinx [2] released its quarterly Mortgage Fraud Risk Report [3], revealing that the National Mortgage Fraud Risk Index is 101 for Q4 2014, a 3 percent increase from the last quarter and the exact same as last year. Trends at the state, MSA, and ZIP-code levels reveal fraud triggers, according to Interthinx.
Interthinx provides complete risk mitigation solutions for the financial services industry and is a subsidiary of First American Financial Corporation. The Mortgage Fraud Risk Report provides knowledge about current trends in the home buying market through the analysis of millions of loan applications that are gathered from the industry’s use of the Interthinx FraudGUARD, a loan-level fraud detection tool.
"Consumers should know that the mortgage industry is focused on making lending safer and fraud free, and taking dramatic steps to prevent bad actors from stealing identities and perpetrating mortgage fraud in all its forms,” said Mark Fleming, chief economist at First American Financial Corporation. "I don’t expect fraud risk to rise much in the year ahead because tougher underwriting standards have made it more difficult and more risky for bad actors to perpetrate fraud."
Fleming also adds that there has been a large decline since 2013 in employment and income related fraud due to the implementation of QM and the Ability-to-Repay rules, which is causing underwriters to pay much closer attention to employment and income statements in mortgage applications.
Although the National Mortgage Fraud Risk Index is up from the last quarter, mortgage fraud risk has become more scattered across the country, proving that the culprits monitor and target economic and market changes for opportunities. California and Florida have shown ample opportunity to commit mortgage fraud due to the area having plenty of distressed properties and borrowers. The Northeast remains high at risk and is increasing in parts of New York. Energy dependent regions such as Texas, Oklahoma, Kansas, and the Dakotas demand careful monitoring as mortgage fraud risk rises.
“Clearly, mortgage fraud is a crime of economic opportunism, the nature of which serves to remind our industry that state, MSA, and ZIP code trends can be more directly linked to cause and effect than the national trends,” said Jeff Moyer, president of Interthinx.