Florida and Nevada were the nation's hotspots for mortgage fraud in 2007, with the Sunshine State maintaining its top rank for the second year in a row.
According to data jointly released Thursday
by the Mortgage Bankers Association and the Mortgage Asset Research Institute, LLC, Nevada climed into the second spot last year after ranking sixth for fraud one year earlier.
"The current market conditions, compounded by mortgage fraud, are having a detrimental impact on our entire national economy," said David Kittle, CMB, Chairman-Elect of the MBA.
"The MARI report provides critical insight for those in the real estate finance industry to better understand the factors contributing to these circumstances so that our communities and member companies are protected."
Michigan, California, Utah, Georgia, Virginia, Illinois, New York and Minnesota rounded out the nation's top-ten most fraudulent statewide mortgage markets, according to the report. Colorado showed the greatest improvement from prior years’ rankings, dropping out of the top ten for the first time in five years.
Not surprisingly, the study found that most common forms of fraud involved employment history and claimed income. And fraud has become more apparent in the so-called "bubble states" as borrowers no longer can hide behind massive price appreciation.
"As we began to notice last year, the stagnant and/or declining real estate markets in Florida, Nevada and California have resulted in easier identification of mortgage fraud. Borrowers unable to re-sell their property, end up becoming delinquent on their loans, unmasking the misrepresentation," according to the report.
And 2008 isn't likely to be much better; if anything, deteriorating conditions in the housing market seem likely to only further put the issue of mortgage fraud on the front burner for lenders, servicers and investors.
"Because fraud is persistent, it is imperative for the mortgage industry to collaborate in its efforts to combat mortgage fraud against lenders," said Merle D. Sharick, ChoicePoint Vice President and MARI’s National Manager of Business Development.
For more information, visit http://www.mortgagebankers.org