As the housing downturn in the United States continues to run its course, reported incidents of mortgage fraud are on the rise as well. But it's not what you think; while fraud on 2007 and earlier vintages is just now coming to light, a new report suggested Monday that newly-reported incidents of mortgage fraud increased by 42 percent in the first quarter of this year. That's reported fraud on brand new originations from the first quarter of this year that have since been classified as fraudulent; and it means reported fraud on the early part of the 2008 vintage is worse than the reported fraud on the similar chunk of 2007 vintage originations. The data comes from a new report released today by the Mortgage Asset Research Institute, or MARI. Florida continues to lead all states in mortgage fraud, according to the MARI's quarterly fraud report. In fact, Florida accounted for 24 percent of all properties with material misrepresentation submitted by MARI subscribers for loans originated nationwide during the first quarter of 2008. California is second in the first quarter 2008 mortgage fraud rankings, followed by a three-way tie for third place among Illinois, Maryland and Michigan. That three of the five top states for fraud are those with deeply-troubled local markets is telling, and suggests strong growth in scamming of troubled homeowners; it also likely shows just how far some troubled borrowers will go to get a new loan. For all states, the top fraud incident type was in "General Application Misrepresentation," followed closely by misrepresentations related to "Income" and "Employment." In addition, MARI continues to see multiple fraud types, such as identity theft and identity fraud, in loan transactions. Appraisal misrepresentation (including value inflation and incorrect use of comparables) is most prevalent in Michigan, MARI said, while Maryland has an abnormally high percentage — 69 percent — of tax return and financial statement misrepresentation. "The mortgage industry is currently in a volatile state, as many constituents try to protect themselves from criminals who continue to use these turbulent times as an opportunity to commit new fraud and inflict additional financial damage for our nation's lenders," according to the report. For more information, visit