Home >> News >> Data >> CoreLogic: Mortgage Fraud to Reach $13 Billion by Year-End
Print This Post Print This Post

CoreLogic: Mortgage Fraud to Reach $13 Billion by Year-End

After remaining relatively flat for about a year, mortgage fraud is on the rise again, according to ""CoreLogic."":http://www.corelogic.com/ The firm's ""fraud index"":http://www.corelogic.com/research/2012-mortgage-fraud-trends-report.pdf estimated about $12 billion in fraudulent originations over the year last year but anticipates about $13 billion in mortgage fraud by the end of 2012.


All categories of mortgage fraud increased year-over-year in the first quarter of 2012, with employment fraud taking the lead with a 50 percent increase. CoreLogic attributes this rise to continued high levels of unemployment across the nation combined with low mortgage rates, incentivizing homeowners to misrepresent their employment status on loan applications.

Identity fraud followed employment fraud with a 44 percent increase year-over-year. Income fraud increased 35 percent; occupancy fraud rose by 25 percent; and undisclosed debt fraud increased by the smallest amount, 8 percent over the year.


In contrast to CoreLogic's report of steady origination fraud in 2011, the ""Financial Crimes Enforcement Network (FinCEN),"":http://www.fincen.gov/ which tracks suspicious activity reports (SARs), notes mortgage SARs ""increased significantly"" in both 2010 and 2011.

FinCEN also reports a 31 percent decrease in SARs reported in the first quarter of 2012 when compared to the first quarter of 2011. However, SARs have risen about 10 percent over the year in 2012.

""This upward spike in mortgage fraud counts, according to FinCEN, is largely attributable to mortgage repurchase demands and special filings generated by several institutions,"" CoreLogic notes.

Mortgage SARs may not be recorded until well after the suspicious act was committed.

In an environment of continually increasing distressed sales, CoreLogic sees heightened risk for fraud, especially among short sales. ""CoreLogic research indicates that the mortgage industry is likely to originate $325 million resulting from short sale fraud in 2012,"" the firm states in its report.

CoreLogic also warns servicers to remain vigilant as ""HARP 2.0 and HAMP loans continue to represent significant risk.""

During the first quarter of this year, Nevada ranked as the top riskiest state in the nation, according to CoreLogic. Nevada was followed by Arizona, Georgia, Michigan, and Florida.

Among ZIP codes, Chicago took the No. 1 spot for the quarter. Oakland, California, took the No. 2 spot, followed by Atlanta; Orlando, Florida; and the Orlando-Kissimmee area, also in Florida.

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.

Check Also

Fewer Borrowers Making Full Loan Payments

A new report found young borrowers and low-income households are the most at-risk at missing payments.


With daily content from MReport, you’ll never miss another important headline in originations, lending, or servicing. Subscribe to MDaily to begin receiving a complimentary daily email containing the top mortgage news and market information.