Report Finds Continuing Collusion Fraud Activity In Mortgage Banking

Posted by Orb Staff on July 11, 2012 No Comments
Categories : Residential Mortgage

11961_investigation2 Report Finds Continuing Collusion Fraud Activity In Mortgage Banking There is evidence of persistent collusion fraud activity in mortgage banking during the past three years, according to the 14th Annual Mortgage Fraud Report issued by LexisNexis Risk Solutions.

The LexisNexis report – formerly known as the Mortgage Asset Research Institute (MARI) Report – found evidence of collusion by professionals in the mortgage industry was relatively consistent at just below 5% of all loan originations. Seven percent of loans originated in 2009 were reported with evidence of collusion, and that percentage jumped to 9.7% for 2010. Last year's number was down to 6.8%, still slightly above historic levels.

For 2011, Florida headed the list as the state with the highest number of mortgage fraud investigations, followed by Nevada, Arizona, Michigan and Rhode Island. In addition, closer analysis of the most reported areas for fraud and misrepresentation for loans originated in 2011 yields five metropolitan statistical areas (MSAs) that represent 46% of all mortgage fraud reports. The top three MSAs were Los Angeles-Riverside-Orange County, Calif., with 16% fraud, followed by New York-Northern New Jersey-Long Island with 11% fraud and Miami-Fort Lauderdale, Fla. with 7%.

‘Increased levels of fraud and misrepresentation in the foreclosure, short sale, and real estate owned worlds have pushed the issue of collusion to the forefront,’ says Tom Brown, senior vice president of financial services at LexisNexis. ‘Now, more than ever before, these complex schemes are coming under increased scrutiny, and investigators need to pay attention to all parties and relationships in non-arm's length transactions. Data alone is not enough to identify fraud. It's the application of linking technologies and analysis that shines a light on collusion and fraud in general.’

The full report, as well as previous years' reports, is available online.

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