Western States Dominate Fraud Index

Nevada and California dominate the 10 riskiest Metropolitan Statistical Areas (MSAs) in terms of mortgage fraud, according to a newly released report from Interthinx.

The company's Mortgage Fraud Risk Report shows Nevada as having the highest risk, with a Fraud Index value of 245. By comparison, California, which contains eight of the 10 riskiest MSAs, charted an index value 176. The national index value is 130.

Mortgage fraud in the second quarter shifted to schemes that target distressed borrowers and the glut of real estate owned properties, Interthinx says.

"Federally funded economic stimulus and stabilization programs that target foreclosure prevention are also contributing to the current shift to schemes involving defaulted and foreclosed properties," the report notes.

The Property Valuation Fraud Index jumped 56% from the same period in 2008, reflecting fraudulent activity relating to short sales and REO inventories. The Occupancy Fraud Index, meanwhile, declined 25%. The decline was caused by the generally depressed market for residential investment and rental properties, Interthinx says.

As lenders increased their use of IRS data to verify income during the second quarter, Interthinx's Employment/Income Fraud Index also fell, the company reports.

SOURCE: Interthinx


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