Reported cases of mortgage fraud were up 42 percent in the first quarter of 2008 compared to a year ago, the Mortgage Asset Research Institute (MARI) reportedtoday.
Residential mortgage fraud was most rampant in the state of Florida, accounting for 24 percent of all properties with material misrepresentation during the quarter.
And 39 percent of the reports submitted were for properties located in the Miami metropolitan statistical area.
California was second in terms of total fraud, followed by a three-way tie between Illinois, Maryland, and Michigan.
Los Angeles properties accounted for 52 percent of all fraud reported, while 94 percent of investigations in Illinois were for properties in Chicago.
The most common type of fraud was “General Application Misrepresentation,” which can include any number of things, followed by income and employment misrepresentations (stated income loans anybody?).
Income misrepresentation was found in more than half of Florida’s cases, while employment misrepresentation was seen in 40 percent of California’s reported cases.
Appraisal misrepresentation, such as value inflation and incorrect use of comparables, was most prevalent in the state of Michigan.
In Maryland, 69 percent of reported cases involved tax return and/or financial statement misrepresentation.
“The mortgage industry is currently in a volatile state, as many constituents try to protect themselves from criminals who continue to use these turbulent times as an opportunity to commit new fraud and inflict additional financial damage for our nation’s lenders,” according to the MARI Quarterly Fraud Report.