Mortgage fraud down but risky pockets persist

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mortgage fraudMortgage fraud is on the decline even among subprime loans, according to a new report, but some parts of the country continue to stubbornly buck that trend. Overall, CoreLogic found that fraud was down by 25% nationwide since its 2007 peak.

Tim Grace, senior vice president of fraud analytics, attributed the downward trend to lender restrictions and scrutiny, but noted that $14 billion in fraud losses continued in 2009. "While the industry has done good work there is evidence that fraud patterns are changing and becoming increasingly better hidden," Grace said in a news release.

Of the remaining fraud, nearly a third was income fraud, followed by identity fraud. Breaking it down regionally, income fraud arose most in Wyoming, California and Georgia, while identity issues cropped up in Arizona -- a leader, CoreLogic reported, in credit card identity fraud.

The states with the highest levels of mortgage fraud were Florida, South Carolina, North Carolina, California and Georgia. Broken down by city, those topping the list were Jamaica, New York; Orlando, Florida; Atlanta, and Detroit.

In addition, short sales continued to rise -- growing nearly threefold from the first quarter of 2008 to the fourth quarter of 2009. Nearly one in 200, CoreLogic found, was deemed "very suspicious" by lenders because it was resold less than two months later at a price more than 20% higher.
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