Mortgage fraud risk is improving nationally as Interthinx’s quarterly index reached its lowest mark in nearly three years.
Overall, the national mortgage fraud risk index decreased 4.3% in 1Q 2012 from the previous quarter and 3.1% from a year ago.
Property valuation fraud risk was down 12% quarter-over-quarter, while identity fraud risk and occupancy fraud risk also both fell 2% during this time period.
However, employment and income fraud risk rose 5% from the fourth quarter of 2011 and 18% from the first quarter last year. Over the last two years, employment and income fraud risk has gone up 37%.
“The continued increase is due to misrepresentation of borrower data to meet debt-to-income thresholds required by lenders,” Interthinx said in the report. “As already low mortgage rates have fallen further to new historical lows, refinancing activity has surged. The resulting change in the composition of loan applications is at least partially responsible for many of the trends seen over the last year.”
Nevada regained the status as the riskiest state for mortgage fraud in the first quarter of 2012 after Arizona, which now is ranked as the second most likely state for fraud risk, took over this spot in the prior quarter. Florida was third on the list for mortgage fraud risk as it contains the two highest metropolitan statistical areas—Cape Coral and Miami—and half of the top ten riskiest ZIP codes in the nation for the possibility of fraud.
The number of markets considered as “very high risk” for mortgage fraud decreased from 67 to 62. California and Florida account for more than half of the MSAs classified under this category, while Michigan, Ohio, Colorado and Arizona cities make up another fifth on this list.
The Agoura Hills, Calif.-based company’s mortgage fraud risk report provides insight into current fraud trends through the analysis of more than 12 million loan applications collected in Interthinx’s FraudGuard loan-level fraud detection tool.
