The Mortgage Asset Research Institute (MARI), whose subscribers represent 70% of the mortgage finance space, reports today appraisal fraud is taking a larger proportion of trickery alleged in suspicious activity reports (SARs) filed with the Financial Crimes Enforcement Network (FinCEN). In 2008, suspected appraisal/valuation fraud stood at 22% of mortgage fraud reports. In 2009, that jumped to 33%, said MARI in a conference call on its yearly results. "It is not surprising given the current state of the housing market," said Darius Bozorgi, CEO of Veros, an appraisal software provider to mortgage lenders and the secondary market. Veros, along with Lender Processing Services (LPS) provide support to MARI in its yearly report on fraud. "Appraisal fraud was masked in the past by rapidly appreciating housing market," added Bozorgi. "In a rapidly depreciating market, appraisal fraud is more apparent." The report added that the states of Arizona, New Jersey and Virginia are new to the top ten list of states with the highest amount of SARs. The amount of SARs filed rose to 67,190 in 2009, from 63,713 in 2008 and 46,717 in 2007. The below graph is from today's presentation and is reproduced with permission from LexisNexis Risk Solutions, the global information provider that operates MARI: Tax return and financial statement reporting continued to hold a top spot in fraud reports, going to 26% from 28% in 2008. This comes as no surprise to Denise James, the director of Mortgage Solutions at Lexis Nexis, considering the state of the economy. "Consumers are becoming a little more desperate for credit," she said, adding that the documents itself are not fraud proof, thereby underscoring the growing importance of due diligence when originating loans. Write to Jacob Gaffney. The author holds no relevant investments.