Incidences of Mortgage Fraud Decreased Last Year but Rate of Fraud Increases by 5 Percent

By Kyle Chezum Updated on 5/10/2011

 

There is absolutely no question that the financial crisis provided an opportunity for scam artists to commit mortgage fraud at levels not seen before.  But a recent study shows that actual incidences of mortgage fraud have decreased over the past few years.  Unfortunately, this is due to a significantly reduced number of home loans being closed.  As a result, the rate of mortgage fraud has increased over the same period of time.

Lexis Nexis, a mortgage research institute, authored the report which showed that the number of reported fraud cases decreased 41% between the year of 2009 and the year of 2010.  The data for the study came from mortgage brokers, banks, insurers, and from the GSEs, Fannie and Freddie.

The decrease in the number of reported fraud cases is not the whole story.  As mentioned above, Lexis Nexis confirmed that the rate of fraud is actually on an upswing.  Reports of fraud increased by 5% during 2010.  A total of 70,472 fraudulent activity reports were filed.

Florida and New York led the way with the highest number of fraudulent activity reports.  California was close behind.  Lexis Nexis didn't offer conclusions as to why mortgage fraud rates may be increasing despite lower numbers of mortgage originations, but the mortgage processing errors of last fall likely played a significant role.