For the first time in 13 years, Georgia won't be among the top ten states for mortgage fraud when LexisNexis releases its annual MARI fraud index on May 2.
Arizona also is leaving the list that's compiled by LexisNexis' Mortgage Asset Research Institute, according to a preview presented at the American Bankers Association's Real Estate Lending Conference in Baltimore.
The two states have been replaced by Ohio and Colorado, Merle Sharick, a solutions consultant in the Alpharetta, Ga.-based firm's mortgage and real estate group, told the meeting. It is the first time either state has made the list.
Sharick said MARI's 13th annual report will show "troubling trends" in appraisal and valuation fraud as well as the rising use of erroneous tax returns to support false statements of earnings. The firm also has been able to identify new trends in identity misuse and bankruptcy abuse, he said.
Loan fraud "is still pervasive," he said. "The mortgage business is one of the last ones standing, so crooks are trying to take advantage of whatever holes in the system they can find, and everybody's got them."
Worse, Sharick said, is that the scam artists have better technology than the lenders they are fleecing, and they are more creative, too.
For example, it took them "just about three weeks" to figure out how to get past lenders who are now verifying applicants' tax returns with the Internal Revenue Service, the fraud expert said. They file a fraudulent return with the IRS, and after the lender checks his copy with the one the IRS has on file, they file amended returns that more honestly reflect their earnings.
