A Year of Mortgage Fraud, and the New Year

Mortgage fraud proved its staying power in headlines for 2011, even with incidents for fraudulent loan applications reportedly on the decline from the year before. _MReport_ offers a year in review ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô and a look at how lenders and servicers continue to fight fraud into the New Year.

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In releasing the _Second Quarter 2011 Mortgage Fraud Index_, ""MortgageDaily.com"":http://www.mortgagedaily.com/ found mortgage fraud on the decline from years before in September, with reports of fraudulent documentation up 27 percent from the previous quarter but down from 1699 for the same quarter seen in 2010.

The Web site also found California topping a list of states for mortgage fraud activity by yearend, with New York and Florida not far behind, followed shortly by South Carolina and Minnesota.

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New York ranked second by dollar volume in mortgage fraud at $199,600,000, followed by Florida with $144,320,669 and a ranking as the worst state for fraud on the index.

MortgageDaily.com found figures for mortgage fraud rising year-over-year

Figures for mortgage fraud increased quarter-over-quarter, accelerating from $1,587,573,586 to $1,333,189,232 but fell year-over-year from $1,850,531,120, according to the Web site.

""Becky Walzak"":http://www.linkedin.com/in/walzakrisk, president of Walzak Consulting, tells _MReport_ that lenders and servicers continue in their pursuit of solutions to mortgage fraud prevention despite any rise or fall in recent numbers.

""Lenders are very hesitant to lend anything,"" she says. ""They want all this compensation├â┬ó├óÔÇÜ┬¼├é┬ª and one thing that happens with more documentation is that you get more fraudulent documentation.""

She calls for ""more due diligence"" in servicing and origination, suggesting that ""a good idea would be to strengthen the management system. Lenders and servicers still need to do what they need to on the front and back ends of these loans.""

Adds Walzak: ""They should train the underwriters. Origination really has to do a better job with quality control and processes. Anybody can see patterns in mortgage fraud.""