Roughly $7.4 billion of fraudulent mortgages will be originated this year, a 40% decline from 2011, a decrease primarily due to significantly lower fundings volumes in 2011, according to a new report from CoreLogic.
Based on an analysis of 10.5 million loan applications from the first quarter of 2005 through the first quarter of 2011, CoreLogic's Mortgage Fraud Trends Report offers a caution about “the ever-changing nature of fraud,” saying that some scams are now more popular than before.
Still, the firm's CoreLogic Fraud Index has remained relatively flat for the past five quarters. The company attributes the decrease to “lenders' improved pre-funding fraud controls” that have curbed the fraud growth that spiked in 2007.
One of the new fraud “stars” is property-related scams, which increased 262% compared to last year. Meanwhile, identity fraud decreased 45%, CoreLogic said, attributing the drop to public awareness and more organized efforts to fight it.
Analysts stressed that while the overall fraud rate “has been relatively flat over the last few quarters,” new fraud schemes are showing up where there are weaknesses and vulnerabilities in lenders' fraud prevention programs.
In response, CoreLogic said it has designed an Alert Risk Index “to evaluate the movement in individual fraud types and to observe additional risk patterns.”
