Mortgage Fraud Continues

Even with housing markets in chaos, and lending practices toughened with tighter underwriting, unsavory mortgage activity is still going on.

Even with housing markets in chaos, and lending practices toughened with tighter underwriting, unsavory mortgage activity is still going on. Mortgage fraud is still soaring, according to a report issued from the Mortgage Asset Research Institute, part of ChoicePoint. A study released by MARI suggests that the number of fraudulent loans made during the first 3 months increased by 42% compared with the same time in 07.

That sizable jump surprised even MARI representatives, who report that, "We were stunned," said spokeswoman Jennifer Butts. "It shows that some folks [in the industry] are desperate." Most fraud involves average home buyers whose lending officers feel compelled to tweak their applications. But some involve true criminal dealings. Identity theft is a major problem in Illinois, for example, accounting for 6 % of all mortgage fraud in that state. The most popular method: crime rings use bogus identities to get mortgages on properties they don't own. They take the money, and get disappear.

Florida had 24 percent of the national total for mortgage fraud, followed by California. In third was Illinois, then Maryland and Michigan which were about equal. Miami was the center of the mortgage fraud, and accounted for over half of Florida's incidents alone. "The reality is that the industry's structure has not changed," said Bill Garber, a director of government affairs for the Appraisal Institute trade group. "Mortgage brokers are paid on commission; loan officers are rewarded for volume. There are the same pressures to get things done."