Distressed-Sales Fraud Risk Is High, CoreLogic Reports

Mortgage fraud has increased by more than 20% since the fraud rates reached their lowest point in early 2009, CoreLogic says in a new report. Fraud is migrating toward what CoreLogic describes as ‘higher-risk, high-volume’ loan programs, including the Home Affordable Refinance Program and programs offered by the Federal Housing Administration, as well as distressed sales (i.e., short sales, real estate owned (REO) sales).

The report, which can be accessed here, is based on analysis of 7 million representative loan files from the CoreLogic Mortgage Fraud Consortium database.Â

‘Fraud continues to shift to areas of the lending business where large volume increases occur over short periods of time, or where advanced risk mitigation processes are not squarely in place," says Tim Grace, senior vice president of Fraud Solutions at CoreLogic.

Refinancing-related fraud risk grew about 30% over the seven quarters CoreLogic analyzed, Grace adds. Also, REO sales, which totaled about 120,000 in the second quarter of the year, pose a greater risk than short sales, Grace says. One in every 24 REO sales is associated with a fraudulent resale.

Southern California, Phoenix, Detroit and Atlanta are property-flipping and -flopping hot spots, CoreLogic reports.

Occupancy fraud, employment fraud and undisclosed debt are on the rise, the company adds, citing comments from lenders.

SOURCE: CoreLogic


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