For the first time since the fourth quarter of 2009, Las Vegas and Phoenix are no longer two of the top metros at risk for mortgage fraud, according to analytics firm Interthinx.
The Agoura Hills, Calif.-based firm released its national mortgage fraud risk index, which climbed 6.7% in the second quarter to 149 after falling slightly in the first quarter. The reclassification of 28 metros in the quarter pushed the number of areas in the “very high risk” category to 91, causing the nation’s overall risk of mortgage fraud to intensify.
A value greater than 100 indicates an elevated risk of mortgage fraud.
The first-quarter drop echoes findings by the Financial Crimes Enforcement Network, which said that suspicious activity reports involving potential mortgage fraud declined 31% in the first quarter to 17,651 from 25,485 in the year-ago quarter.
“This report shows that overall fraud risk is rising and is migrating geographically, as evidenced by Georgia and the rise in risk in the southeastern United States generally,” stated Interthinx President Kevin Coop.
The bulk of new metros in the “very high risk” category arrived from states not featured on the list in the first quarter, most notably Wisconsin with four new metros and Pennsylvania and Tennessee with three each.
Nevada and Arizona remain the two riskiest states despite experiencing a small fall in overall fraud risk from the first quarter. Nevada’s Index value is stands at 208, with Arizona’s at 206.
Interthinx found that Chattanooga, Tenn., which experienced a quarterly increase of more than 30% in its index value, became the riskiest metro in the nation (click on chart below). And Georgia replaced California among the top five states for overall mortgage fraud risk for the first time since the report started in second-quarter 2009.
Despite California’s overall decline in fraud risk, its metros are well represented in all of Interthinx’s top ten lists, taking nine of the top ten spots for employment and income fraud risk.
Identity fraud is frequently used in mortgage fraud schemes to hide the identity of the perpetrators or to obtain a credit profile that will meet lender guidelines. New York City continued its precipitous rise in that area, ascending to sixth place in the second quarter from seventeenth place just six months ago. Five New York City area ZIP codes — including three in Brooklyn — are among the top 10 riskiest ZIPs in the nation.