Reported incidents of mortgage fraud and misrepresentation by professionals in the residential mortgage industry continue to climb. According to a
report released Monday by the LexisNexis Mortgage Asset Research Institute (MARI), such cases increased 7 percent for the 2009 fiscal year when compared to the previous 12 months.
The pace has slowed since the 2007-2008 increase of 26 percent thanks to improvements in industry reporting and policing, but MARI says the continued increase means fraudsters are taking advantage of desperate and confused homeowners during a time of crisis. Foreclosure rescue and loan modification scams are on the rise, and now the company is seeing a significant increase in short sale scams.
“Lenders are facing hurdles with compliance, loss mitigation, and staving off additional financial losses due to poor loan performance,” said Denise James, LexisNexis’ director of real estate solutions and co-author of the report. “This is not to say that mortgage fraud is going away; it is still a serious problem, and new trends continue to emerge.”
James says it remains critical for those in the mortgage industry to reassess their processes, share information and fraud incidence reports, and ready themselves for more complex schemes in order to continue the fight against mortgage fraud.
The top fraud incident type in 2009 – representing 59 percent of all reported fraud types – was application misrepresentation. This is the sixth year in a row it has topped the list.
In second place were frauds related to appraisal and valuation misrepresentation, an area experts say is particularly vulnerable in short sale transactions. Property valuation fraud increased 11 percent from 2008 to 2009, representing 33 percent of all reported incidences last year. MARI says this is the most notable increase in reported fraud types in 2009.
Additional documented fraud types included verifications of deposit, verifications of employment, escrow or closing costs, and credit reports.
“The information contained in LexisNexis Mortgage Asset Research Institute’s 2009 Report serves as yet another wakeup call for the industry on the status and continued presence of mortgage fraud,” said Darius Bozorgi, president and CEO of Veros, an analytics and risk mitigation firm in California. “Fraud increases risk exponentially, and the industry must meet this threat head on using all available intelligence and tools.”
According to MARI’s study, Florida has moved back into first place among the top states for mortgage fraud and misrepresentation. The company’s analysis shows that Florida has close to three times the expected amount of reported mortgage fraud and misrepresentation for its origination volume.
New York moved into second place in terms of the highest mortgage fraud rates, followed by California. At No. 4, Arizona claimed a spot among the top five for the first time in the history of MARI’s study.
Michigan had the fifth highest mortgage fraud rate. Rounding out MARI’s top ten list were Maryland, New Jersey, Georgia, Illinois, and Virginia.
Although eight of the top 10 states for mortgage fraud overall are in the eastern half of the country, MARI found that the states with the highest concentration of appraisal fraud nationwide are all Midwestern states – Ohio, Illinois, and Michigan.
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Tuesday, April 27, 2010
Monday, April 19, 2010
Foreclosure Activity Increases 7%
The foreclosure tide is still rising. RealtyTrac reported Thursday that foreclosure filings were brought against nearly 1 million properties during the first three months of 2010. That’s a 7 percent increase from the previous quarter, 16 percent higher than a year ago, and equates to one in every 138 homes in the United States.
Altogether, foreclosure filings – including default notices, scheduled auctions, and bank repossessions – were reported on 932,234 properties from January to March of 2010. According to RealtyTrac, the number of scheduled auctions and bank repossessions hit new quarterly records.
All foreclosure types spiked in March. Filings were reported on 367,056 properties last month, an increase of nearly 19 percent from the previous month and the highest monthly total since RealtyTrac began issuing its report in January 2005.
“Foreclosure activity in the first quarter of 2010 followed a very similar pattern to what we saw in the first quarter of 2009: a shallow trough in January and February followed by a substantial spike in March,” explained James J. Saccacio, RealtyTrac’s CEO. “One difference, however, is that the increases were more tilted toward the final stage of foreclosure,” with REOs increasing in the first quarter of this year, compared to a decrease during the same period last year, he said.
“This subtle shift in the numbers pushed REOs to the highest quarterly total we’ve ever seen in our report and may be further evidence that lenders are starting to make a dent in the backlog of distressed inventory that has built up over the last year as foreclosure prevention programs
and processing delays slowed down the normal foreclosure timeline,” Saccacio said.
During the first three months of this year, RealtyTrac’s data shows there were 257,944 properties repossessed by the lender – an increase of 9 percent from the previous quarter and an increase of 35 percent compared to the first quarter of 2009.
As it has for the past 13 quarters, Nevada continued to document the nation’s highest state foreclosure rate in the first quarter of 2010. One in every 33 Nevada homes received a foreclosure filing during the three-month period, more than four times the national average and an increase of nearly 15 percent from the previous quarter. Still, Nevada’s total of 34,557 properties receiving a foreclosure filing in the first quarter was down 16 percent from the first quarter of 2009.
Arizona’s foreclosure activity increased on both a quarterly and annual basis, helping the state to post the nation’s second highest state foreclosure rate for the third consecutive quarter. One in every 49 Arizona properties received a foreclosure filing during the quarter – nearly three times the national average.
With one in every 57 Florida properties in some stage of foreclosure, the state posted the nation’s third highest state foreclosure rate for the second straight quarter. Florida’s Q1 foreclosure activity also increased on both a quarterly and annual basis.
California foreclosure activity decreased 6 percent from the first quarter of 2009, but the state still documented the nation’s fourth highest foreclosure rate, with one in every 62 homes receiving a filing.
Utah’s foreclosure activity increased 75 percent from the first quarter of 2009, the highest annual rise among top-10 states, giving it the nation’s fifth highest foreclosure rate. Foreclosure filings were reported on 10,756 Utah properties, a rate of one in every 88 housing units and an increase of 21 percent from the previous quarter.
Other states with foreclosure rates ranking among RealtyTrac’s top 10 in the first quarter of 2010 were Michigan, Georgia, Idaho, Illinois, and Colorado.
Altogether, foreclosure filings – including default notices, scheduled auctions, and bank repossessions – were reported on 932,234 properties from January to March of 2010. According to RealtyTrac, the number of scheduled auctions and bank repossessions hit new quarterly records.
All foreclosure types spiked in March. Filings were reported on 367,056 properties last month, an increase of nearly 19 percent from the previous month and the highest monthly total since RealtyTrac began issuing its report in January 2005.
“Foreclosure activity in the first quarter of 2010 followed a very similar pattern to what we saw in the first quarter of 2009: a shallow trough in January and February followed by a substantial spike in March,” explained James J. Saccacio, RealtyTrac’s CEO. “One difference, however, is that the increases were more tilted toward the final stage of foreclosure,” with REOs increasing in the first quarter of this year, compared to a decrease during the same period last year, he said.
“This subtle shift in the numbers pushed REOs to the highest quarterly total we’ve ever seen in our report and may be further evidence that lenders are starting to make a dent in the backlog of distressed inventory that has built up over the last year as foreclosure prevention programs
and processing delays slowed down the normal foreclosure timeline,” Saccacio said.
During the first three months of this year, RealtyTrac’s data shows there were 257,944 properties repossessed by the lender – an increase of 9 percent from the previous quarter and an increase of 35 percent compared to the first quarter of 2009.
As it has for the past 13 quarters, Nevada continued to document the nation’s highest state foreclosure rate in the first quarter of 2010. One in every 33 Nevada homes received a foreclosure filing during the three-month period, more than four times the national average and an increase of nearly 15 percent from the previous quarter. Still, Nevada’s total of 34,557 properties receiving a foreclosure filing in the first quarter was down 16 percent from the first quarter of 2009.
Arizona’s foreclosure activity increased on both a quarterly and annual basis, helping the state to post the nation’s second highest state foreclosure rate for the third consecutive quarter. One in every 49 Arizona properties received a foreclosure filing during the quarter – nearly three times the national average.
With one in every 57 Florida properties in some stage of foreclosure, the state posted the nation’s third highest state foreclosure rate for the second straight quarter. Florida’s Q1 foreclosure activity also increased on both a quarterly and annual basis.
California foreclosure activity decreased 6 percent from the first quarter of 2009, but the state still documented the nation’s fourth highest foreclosure rate, with one in every 62 homes receiving a filing.
Utah’s foreclosure activity increased 75 percent from the first quarter of 2009, the highest annual rise among top-10 states, giving it the nation’s fifth highest foreclosure rate. Foreclosure filings were reported on 10,756 Utah properties, a rate of one in every 88 housing units and an increase of 21 percent from the previous quarter.
Other states with foreclosure rates ranking among RealtyTrac’s top 10 in the first quarter of 2010 were Michigan, Georgia, Idaho, Illinois, and Colorado.
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