Fraud and Prevention

Interthinx Unveils Fraud Risk Index

By James Comtois
August 26, 2009

National risk mitigation provider Interthinx has unveiled a new quarterly report that includes an analysis of the state of mortgage fraud nationally as well as indices for the four most common types of mortgage fraud.

According to the company, the Interthinx Mortgage Fraud Risk Report provides analysis and detailed information on the state of the mortgage industry that has not previously been available. Interthinx is a leading provider of proven risk mitigation, mortgage fraud prevention, and regulatory compliance tools for the mortgage industry.

The Interthinx Mortgage Fraud Risk Report was created by the new Interthinx analytics team, which was established to provide deeper insight into the extensive pool of data the company amasses from the industry's use of its FraudGuard loan-level fraud detection tool.

"The industry is well aware that mortgage fraud is a growing problem. But before this report was available, there was no easy way to tell precisely where it was increasing at the greatest rate," said Kevin Coop, president of Interthinx. "The professional team we now have in place gives us the ability to develop very granular detail to shed light on a serious area of concern and provide actionable information for our customers."

The report, which covers the second quarter of 2009, reveals that fraud risk, especially valuation fraud, occurs in any market with pricing volatility, whether home prices are rising or falling. In fact, according to the report, valuation fraud is currently the most common type of fraud perpetrated against the industry. According to the new report, the national fraud index is up 7% in 2Q09 from 2Q08.

In addition, the report shows that fraud risk is a leading indicator of foreclosure risk, which suggests that the nation's hottest fraud spots today are likely to be the leading foreclosure metropolitan statistical areas within two years. Interthinx analysts expect fraud indices will continue to rise over the next three years as a large number of adjustable-rate mortgage loans, especially option adjustable-rate mortgages, reset between now and the first quarter of 2012.

"In the letter we sent to Capitol Hill earlier this year, we made it clear that the economic and foreclosure crises will not end until the quality of loan originations is assured," Mr. Coop added. "We have the technology to stop mortgage fraud prior to the funding of loans, and we now have very specific data to show where the problems are concentrated. This report shows where the tools are being used and where fraud continues to thrive."