Mortgage fraud risk decreased significantly in 2014 compared to 2013, according to the Mortgage Fraud Risk Report by Interthinx.
But there is still plenty of mortgage fraud out there, as evidenced by the abundance of news reports on the topic. This is why lenders and servicers must remain vigilant.
The current level of fraud risk is higher than it was pre-recession, and it might be settling into what could be considered the ‘new normal,’ the firm says.
The report shows that the overall risk of mortgage fraud was down 4% in 2014 compared to 2013. Of the four types of mortgage fraud risk tracked – property valuation, identity, occupancy and employment/income – only property valuation fraud risk increased in 2014. It was up 17%.
There is one trend of particular interest: Fraud risk in 2014 was more spread out across the country, whereas in previous years it tended to be concentrated in certain geographic regions.
‘After three years of increasing fraud risk, the 2014 data show both an overall decrease and a shift to more localized concentrations of specific fraud types,’ says Jeff Moyer, chief product and strategy officer at First American Mortgage Solutions, parent company of Interthinx, in a release. ‘In no way diminishing the imperative for lenders, servicers and investors to remain vigilant, overall market stabilization does allow our industry to focus on more highly targeted strategies to address specific fraud threats.’
‘Taking preemptive action against fraud, and the losses related to fraud, is critically important to protect mortgage lenders and consumers,’ adds Mark Fleming, chief economist at First American. ‘As real estate and mortgage markets continue to move toward the new, post-crisis normal, fraud remains a concern that is ever-changing and requires detection methodologies that account for a variety of risk types. Rising property fraud prevalence is not surprising given the economic conditions and rising prices we see today.’
To view the full report, click here.