Communities that are currently struggling due to the effects of fraudulent mortgage transactions may still be suffering years from now, according to research released by Interthinx. In its quarterly Mortgage Fraud Risk Report, Interthinx notes that six of the 10 riskiest metropolitan statistical areas (MSAs) in the nation were in the top 10 a year ago, and all 10 of the MSAs that were at the top of the list for fraud last year are still in the top 20 today.
The report analyzes national fraud risk and indices for the four most common types of mortgage fraud risk. Overall, analysts found that fraud risk increased by 12% compared with the same period a year earlier. Currently, the national fraud risk index is 145 (n = 100).
Nevada has replaced Arizona as the state with the highest fraud risk, though both states have indices about 40 points greater than that of third-place California, Interthinx says. The high indices in Nevada and Arizona are due mostly to the disproportionately high refinance risk in those states.
ZIP-code-level analysis showed that the majority of the 10 riskiest ZIP codes are, not surprisingly, located within MSAs that are in the "very risky" category. However, two of the three riskiest ZIP codes are located in Chicago, which, at the MSA level, has an index less than the national value.
The identity fraud risk index had a quarter-on-quarter increase of 10% for the second consecutive quarter, the only type-specific fraud index to display a strong increasing trend over the last three quarters, according to Interthinx. After falling 11% between the fourth quarter of 2009 and the first quarter of 2010, the occupancy fraud risk decreased another 9% in the most recent quarter.