South Florida is the nation's capital of mortgage fraud, property data firm CoreLogic says.
In a report released Wednesday,
The New York metro area ranked second nationally, followed by McAllen, Texas, in third, Los Angeles in fourth and Daytona Beach in fifth.
Mortgage fraud was rampant in South Florida during the housing bubble of 2005 to 2007. While that brand of scheming has disappeared, South Florida loan applicants remain far likelier to fudge the numbers than borrowers anywhere else in the country, CoreLogic found.
"Florida is known for lengthy foreclosure times, so the window of time for distress-motivated fraud is longer than in most other states," said Bridget Berg, principal of fraud solutions strategy for CoreLogic. "This also delays the beginning of credit recovery for the consumer, which may spur more fraud related to hiding past derogatory credit to qualify for a home in the future."
South Florida borrowers fudge their loan applications to boost income levels and hide other real estate debt, Berg said. That's similar to the types of fraud taking place in other parts of the U.S., she said — but it occurs "at a much higher rate" in South Florida.
In one intriguing finding, CoreLogic reports that iBuyers — Zillow Offers, Opendoor, Offerpad and other companies that make instant offers for homes — have helped lower fraud risk. The new breed of buyer, which doesn't use mortgages, accounted for more than 1% of all home sales in 2018.
