Many industry insiders have likened mortgage fraud to the herpes virus: A crime of opportunity, it has a tendency to strike when and where lenders and servicers are most vulnerable.
As such, Kroll Factual Data's latest research shows that while potential mortgage fraud increased only about 1.06% nationwide from the fourth quarter of 2012 to the first quarter of this year, ‘large increases in certain metropolitan statistical areas (MSAs) coupled with seesawing data from quarter to quarter point to a disconcerting state of unpredictability in certain locations.’
MSAs with the highest increases for potential fraud activity, on a quarter-over-quarter basis, include Sacramento, Calif. (37.98%), Barnstable-Yarmouth, Mass. (37.55%), Wilmington, Del. (34.32%), Syracuse, N.Y. (26.17%) and Fort Pierce-Port St. Lucie, Fla. (24.73%).
Rod Bazzani, president of Kroll Factual Data, noted that the increases in Sacramento and Barnstable-Yarmouth were of particular interest as those two MSAs were in the top three MSAs showing decreases for the fourth quarter of 2012.
‘The fact that these two MSAs could fall from among those with the largest decreases to those with the largest increases in the span of three months is a reminder to lenders that they cannot let their guard down when it comes to ensuring the integrity and accuracy of mortgage application data,’ he said.
To arrive at its findings, Kroll Factual Data examined MSAs with at least 1,000 loan applications per quarter and, using its proprietary risk analysis and verification engines, isolated certain files that may contain indicators of origination fraud.
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