CoreLogic sees $7 billion in mortgage fraud
Analysts at CoreLogic ($27.65 0.39%) predicted $7 billion in originated mortgages this year would show some signs of fraud.
The estimate is down from the $12 billion in originations with possible fraud predicted in 2010, but CoreLogic said the decrease is primarily down because of fewer loans. The firm's own index, which measures the concentration of fraud across the industry, remained flat since the first quarter of last year. It declined more than 28% from its peak in the third quarter of 2007.
Tim Grace, senior vice president of product management and analytics at CoreLogic, said although the fraud rate flattened, new schemes are ever evolving. Indeed, the Financial Crimes Enforcement Network said Wednesday second quarter suspicious activity reports nearly doubled from last year.
"The study shows that the primary reason for the increase in property fraud risk is related to potential fraudulent flipping and flopping of properties," Grace said. "As fraud trends change, CoreLogic can examine the consequent change in fraudsters’ patterns generated each day based on newly originated loans."
Grace said the increase in risk is related to potential fraudulent flipping and flopping of properties. In August, Freddie Mac began alerting real estate agents to a rise in fraudulent short sales. In some instances, agents rigged sales at a low price and hid better offers from the bank so the investor could net a larger return on a quick re-sale of the property.
CoreLogic said the riskiest areas of the country were Chicago, Washington, Brooklyn and Atlanta.
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