Fannie Finds Southeast Had the Most Fraud in Past Two Years

Fannie Mae during 2008-2009 found the highest amount of fraud was in the Southeast at 32%, followed by the Midwest, California and the Northeast. "The Northeast region has increased dramatically in the last couple of years. We've seen rings with inflated values, undisclosed liabilities or 'shot-gunning,' and fraud involved with closings and settlement companies," Amy Heinz, director, mortgage fraud program, at Fannie Mae told attendees at the Mortgage Bankers Association's National Fraud Issues Conference in Chicago. Florida accounts for more fraud than in any single region, she said. Fannie also is seeing a trend toward back-to-back property flips perpetrated by individuals who buy low and then convince lenders to sell at inflated prices. After these sales, the properties default, Heinz said.