Mortgage Fraud Risk Index Highest Since 2004

Lenders face a higher risk of mortgage fraud now than they have in years, according to a report released by Interthinx, a national provider of risk mitigation and regulatory compliance tools for the financial services industry headquartered in Agoura Hills. For the first time since 2004 the national mortgage fraud risk surpassed 150. In the first quarter of 2010, overall mortgage fraud risk increased by 4 percent from the previous quarter and 11 percent from the same quarter a year ago to 151, said the report released June 8. Six of the ten metropolitan statistical areas with the highest fraud risk are in California. With the exception of Las Vegas, which saw an 8 percent decrease in its index over the last year, all the areas in the top ten have seen increases of more than 25 percent. “The Interthinx Fraud Risk Indices have proven to be a leading indicator of foreclosure activity. Therefore, the regions that currently have high Fraud Risk Indices are likely to continue to experience high foreclosure rates going forward until housing prices bottom out and there is significant improvement in general economic conditions,” read the report. Based on the Fraud Risk Indices, regions that bear close scrutiny include: Arizona, which experienced the largest one year increase of 73 with a Mortgage Fraud Risk Index of 246; Nevada, which is the next most risky state with an index of 237; California and Florida, which both have indices greater than 200; and Georgia, which had the largest quarter-on-quarter increase in the index of 37, and entered the top 10 in sixth place. The Interthinx Fraud Risk Report represents an analysis of residential mortgage fraud risk throughout the United States. Andrea Alegria