Reported incidents of mortgage fraud in the U.S. increased by 45% on fewer loan applications in the second quarter of 2008 from a year ago, according to a report released by the Mortgage Asset Research Institute (MARI), a LexisNexis service. The MARI Quarterly Fraud Report is based on data submitted by MARI subscribers on loans originated in the second quarter of this year that have since been classified as fraudulent.
Among the report's findings were that fraud most often occurs at the beginning of the loan process, with more than 65% of fraud incidents attributed to ‘general application misrepresentation’ – a trend that has continued over the past two quarters. General application misrepresentation is when information such as an incorrect name, occupancy or asset is potentially misrepresented during the application process.
This fraud trend is followed closely by reported misrepresentations related to income (36% of second-quarter applications) and employment (20%).
The MARI report says that to combat fraud, mortgage companies need better technology to evaluate applications, more collaboration with other mortgage companies and earlier response to suspicious loan applications (i.e., before they go into origination, the stage in which most fraud occurs).
To view the report in its entirety, visit www.marisolutions.com/resources-news.asp.
SOURCE: MARI