Interthinx revealed in its latest Mortgage Fraud Risk Report that occupancy and employment fraud continue to be a major problem nationwide.
In the first quarter, the Agoura Hills, Calif.-based firm found that its occupancy fraud risk index rose by 25% from the previous quarter. This index is based on investors who falsely claim the intent to occupy a purchased property so they can obtain a mortgage with lower downpayments and interest rates.
For the fourth consecutive quarter, Nevada had the highest fraud risk. Other notable states that have the most risk for fraud is Arizona, Florida and Hawaii. California, which contains five of the top 10 riskiest metropolitan statistical areas, was fifth on Interthinx’s list for possible fraud.
“Risk is becoming more prevalent across the board, as evidenced by even the riskiest states seeing an average 24% increase in the occupancy fraud index,” said Kevin Coop, president of Interthinx. “Interthinx recommends that lenders continue to adhere to strict prefunding fraud detection policies in conjunction with all compliance guidelines not only to meet regulatory requirements but also to keep fraudsters at bay.”
The firm also found that five MSAs saw increases of more than 70% over last year in their employment/income fraud risk. This index tracks when a borrower’s income is misrepresented in order to qualify for a loan.
Interthinx said many of the low-risk states from 4Q 2010 saw significant escalations in mortgage fraud risk, driven by increases in the occupancy index and employment index by 35% and 31%, respectively.
Miami, which currently is the second riskiest MSA, is currently in the top five in three of the four indexes the firm monitors, including being the first on the occupancy list. Local Chicago ZIP codes continue to top the index for fraud risk, with 60636 ranking first, Interthinx said.
