Mortgage fraud activity climbed to over $4 billion last year as tighter lending practices and sinking property values contributed to the growing problem, a report conducted by web publication MortgageDaily.com revealed.
The group, who identified cases of fraud nationwide totaling a minimum of $100,000, found that the flagging housing market both exposed and led to a higher number of incidents, including an abundance of appraisal fraud.
“As the real estate market unraveled last year, mortgage fraud could no longer be hidden,” said MortgageDaily.com publisher Sam Garcia in a statement. “A growing number of cases involving inflated home values and false application information were uncovered.”
It’s likely that those who relied on the loose lending options available during the last several years became more desperate as mortgage lenders toughened guidelines and home prices stopped appreciating.
Not surprisingly, California led the nation in fraud with $1.6 billion reported, the same dollar amount of fraud reported for the entire nation in 2006.
New York came in a distant second, with $600 million in fraud reported, while Ohio led the nation in the rate of mortgage fraud.
Below are the top ten mortgage fraud rates by state:
3. New York
9. North Carolina