The Agoura Hills, Calif.-based risk mitigation firm said overall risk for mortgage fraud across the country increased 16% over the previous quarter. On a yearly basis, fraud risk is up 9%.
The large increase in the fourth quarter’s index was primarily due to a 25% surge in property valuation fraud risk, Interthinx revealed. This trend is occurring because of the prevalent risk taking place nationwide as well as recovery efforts being made in Florida and California where significant investor activity is creating rapid price changes and opportunities for value manipulation.
Florida retained its top spot in the fourth quarter as the riskiest state for mortgage fraud after surpassing Nevada in the third quarter of 2012. Furthermore, the Sunshine State has at least three metropolitan statistical areas in the top ten riskiest lists for overall mortgage fraud, ZIP codes, property valuation and occupancy fraud.
Fraud risk over the past year fell in many Western states, such as California, which dropped to its lowest ranking since the report was created in 2Q 2009. Also, Arizona experienced a 20% drop in risk year-over-year, helping the state fall to seventh place overall after it was among the top three for several years.
Conversely, fraud risk has jumped most notably in Illinois and Ohio, which are now the fifth and sixth riskiest states, respectively.
“Clearly, this report illustrates the reality that the mortgage industry is driven by trends at the state and metropolitan levels and that the will to commit mortgage fraud is not abating—it is simply shifting strategy to meet opportunity,” said Jeff Moyer, president at Interthinx.