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Fraud Increase Called Low on Average, but Higher in Some Areas

JUL 26, 2013 4:46pm ET
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Kroll Factual Data Inc., Loveland, Colo., found possible fraudulent activity in loan applications increased 1.06% on average between the first quarter of this year and the fourth quarter of last year, but in certain metropolitan statistical areas within Massachusetts and California the increase approaches 40%.

“Despite this modest national uptick, large increases in certain metropolitan statistical areas coupled with seesawing data from quarter-to-quarter point to a disconcerting state of unpredictability in certain locations,” said the company, which does automated examinations of at least 1,000 apps each quarter.

Sacramento, Calif., and Barnstable-Yarmouth, Mass., for example, had close to a 38% increase in potential application fraud, but were “in the top three last quarter of geographies showing decreases,” said Rod Bazzani, president, Kroll Factual Data, in a press release.

“The fact that these two MSAs could fall from among those with the largest decreases to those with the largest increases in the span of three months is a reminder to lenders that they cannot let their guard down when it comes to ensuring the integrity and accuracy of mortgage application data.”

While Sacramento ranked No. 1 with a 37.98% increase in possible application fraud and Barnstable-Yarmouth ranked No. 2 (37.55%), the Wilmington, Del./N.J./Md., MSA ranked third (34.32%); Syracuse, N.Y., ranked fourth (26.17%); and Fort Pierce-Port St. Lucie, Fla., ranked fifth (24.73%).

Rounding out the top 10 areas where KFD’s proprietary risk analysis and verification technology picked up the highest increases in possible application fraud are Phoenix-Mesa, Ariz. (20.68%); Lubbock, Texas (20.48%); Seattle-Everett, Wash. (16.85%), Iowa City (14.34%) and Kansas City, Mo./Kan. (14.02%).

KFD found the top 10 decreases in potential application fraud are primarily on the East Coast, with three exceptions west of the Mississippi. These are Greenville-Spartanburg-Anderson, S.C. (19.62%); Trenton, N.J. (17.01%); Miami (16.7%); Nashua, N.H. (15.05%); Columbia, Mo. (15.05%); Nashville, Tenn. (14.74%); Bridgeport-Milford, Conn. (13.65%); Boise, Idaho (12.5%); San Francisco-Oakland, Calif. (11.84%); and Cincinnati, Ohio-Ky.-Ind. (11.83%).

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