Although suspicious activity in lending is down overall, mortgage fraud still remains a problem in certain areas across the country, according to the 15th annual Mortgage Fraud Report by LexisNexis.  

However, with the implementation of the Consumer Financial Protection Bureau’s Qualified Mortgage in January, there is still plenty of room for uncertainty for the future of the mortgage fraud, the report stated.

“It remains to be seen whether additional regulatory action like that taken by the CFPB will strengthen loan standards enough to see a marked decrease in defaults,” the report said. “If new home originations continue to climb after these quality guidelines are in place, what will the effect be on mortgage fraud?”

But until the effects of the rule can be seen in fruition, here are the 8 states with the most mortgage fraud cases.

8. Michigan (pictured above)

Barely squeaking into the top 8 list, Michigan’s Mortgage Fraud Index came in at 110. However, this is a significant improvement from 2011 when it was ranked in eighth place at 189.

7. California

California’s MFI hit 116 in 2012, a slight dip from 122 in 2011.

According to a report from the California Association of Realtors, California home sales dipped 5.9% from 2012 to 2013 as the market felt the pinch of tighter inventory levels and higher prices.

"In addition, housing prices are improving across the board, even reaching pre-2007 levels in parts of the Bay Area. Higher prices and rising rates as the Fed slowly tapers are additional factors in the sales slowdown evidenced in the December numbers," said Kevin Brown, CAR president.

skyline

6. New Jersey

New Jersey jumped higher on listing, moving to number seven from ten, with its MFI growing from 86 to 120.

5. Illinois

Similarly, Illinois jumped to seat five from eight, drastically growing from 96 to 150.

4. Delaware (picture above)

Delaware posted the largest increase and moved from 18th in 2011 to 4th in 2012. The states MFI’s increased from 63 in 2011 to 165 in 2012.  

According to a recent report from the Philadelphia Federal Reserve from December 2013, new residential permits rose significantly from New Jersey, Delaware and Pennsylvania from November 2012 to November 2013.

In fact, the growth of residential permits issued year to date through November increased by double digits in all three states compared with the same month period in 2012.  

Arizona

3. Arizona (pictured above)

Dropping down from its number two spot in 2011, Arizona’s MFI improved from 216 in 2011 and dipped to 174 in 2012. The Phoenix housing market continues to see home price increases, but those gains are starting to stall, an article from HousingWire stated in January.  

"We decided to come to Phoenix to kick off these new mortgage rules because this community knows all too well the heartaches of troubled homeownership," Richard Cordray, director of the Consumer Financial Protection Bureau said when speaking at a field hearing in Phoenix this week. "One in five Arizona homeowners with a mortgage still owes more than their home is worth. Across the country, that number is roughly one in ten."

Florida

2. Nevada

Nevada’s MFI reached 280 in 2012, a decrease from 292 in 2011. But despite the drop, it jumped into the second place spot after being seated third in 2011. HousingWire recently noted from the recent Federal Housing Finance Agency’s November refinance report that HARP refinances represented 55% of total refinances in Nevada.

1. Florida (pictured above) 

 

Florida’s MFI hit 805 in 2012, which is over eight times the expected rate of fraud for the state, based on it its origination volume, in addition to being almost three times as much as Nevada. The FHFA report also noted that HARP refinances represented 49% of the total refinances in Florida.

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