Fraud often starts small. A fudged figure here, an incomplete loan application there, an over-generous appraisal, but little do employees know that these “little lies” are actually fraudulent information and, in fact, possibly criminal.
Kroll Factual Data, Inc., a leading provider of risk mitigation and verification services to mortgage lenders, banks and credit unions, announced today a 1.06 percent increase throughout the country of possible fraudulent activity associated with loan applications processed by the company between the first quarter of 2013 and the fourth quarter of 2012.
In the area of Sacramento, California and Barnstable-Yarmouth Massachusetts each posted a nearly 38 percent increase in possible fraudulent activity, even with the fact that they were among the top three markets in Q4 2012 that reported decreases.
One of the most difficult aspects of dealing with mortgage fraud is that it’s hard to know the scope of the problem. The human element that’s involved makes would-be fraudsters hard to spot, and those already committing fraud even harder to identify.
The report did show areas with improvements, Greenville-Spartanburg-Anderson South Carolina, Trenton New Jersey, Miami, Florida, Nashua New Hampshire, and Columbia Missouri reported the greatest decreases in possible origination fraud. Declines ranged from 15.05 percent at the low end Nashua and Columbia to 19.62 percent at the highest end Greenville-Spartanburg-Anderson.
Despite this modest national uptick, large increases in certain metropolitan statistical areas (MSAs) coupled with see-sawing data from quarter-to-quarter point to a disconcerting state of unpredictability in certain locations.
This continued increase in mortgage fraud maintains proof, where there is opportunity there will be mortgage fraud.
“What is most notable this quarter, is not only did the data show a nearly 38 percent increase of potential fraud in applications from Sacramento, Calif., and Barnstable-Yarmouth, Mass.,” said Rod Bazzani, President, Kroll Factual Data, “but that these two MSAs were in the top three last quarter of geographies showing decreases. 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.”
Kroll Factual Data examined MSAs with at least 1,000 loan applications per quarter. Using its proprietary risk analysis and verification engines, Kroll Factual Data isolated certain files that may contain indicators of potential mortgage origination fraud. In addition to Sacramento and Barnstable-Yarmouth, the top five MSAs for this quarter posting quarter-over-quarter increases of potential fraud found within submitted loan applications include Wilmington (34.32%), Syracuse (26.17%), and Fort Pierce-Port St. Lucie, Fla. (24.73%).
Please remember fraud is not just a white-collar crime; it’s a people crime. People commit it, people suffer in its wake, people’s lives are ruined, people enforce it, and it’s people like you and I who can prevent it.
Mortgage Fraud is insidious; it creeps up on you. Mortgage Fraud exists because it’s able to exist.