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MBA Releases 2006 MARI Mortgage Fraud Report
By James Comtois
The Mortgage Asset Research Institute LLC, a ChoicePoint Service, has delivered its Ninth Periodic Mortgage Fraud Case Report to the Mortgage Bankers Association. The report examines the current state of residential mortgage fraud and misrepresentation in the United States based on participating lenders' reports to MARI.
According to the report, the number of reports in MARI's Mortgage Data Industry Exchange database pertaining to 2006 originations is approximately 30% higher than the number of reports in the 2005 book of business. Additionally, incidents of mortgage fraud are now more evenly distributed across nearly all states whereas, in prior years, reports tended to be concentrated in relatively few states.
There are changes in the rankings of the states in terms of their mortgage fraud experience, with Florida taking over the top spot and Georgia showing the greatest improvement from prior years' rankings. Also, according to the report, the most common types of fraud found to date in 2006 originations are in the areas of employment history and claimed income.
California's reported fraud had been quite low in the past few years and some industry experts have suggested that its problems were masked by high real estate appreciation. The recent slowdown in its housing market may explain California's return to high ranking in this year's report.
Fraud reports from subprime lenders, according to MARI, are consistent in issue and location to the overall reporting results. The most common types of fraud found to date in 2006 originations are in the areas of employment history and claimed income.
Additionally, the early payment default data for prime loans from First American LoanPerformance is highly influenced by tragic weather events on the Gulf Coast, and few valid conclusions can be drawn from the most recent results. However, this is not the case for subprime loans.
"Collaboration is the key for the mortgage industry as it continues its efforts to fight mortgage fraud against lenders," said Merle D. Sharick, vice president and national manager of business development for MARI. "MARI is pleased to be part of this effort by disseminating current data to MBA members through our annual fraud report."
"Fraud against mortgage lenders is a growing concern to all who have a stake in our industry," said John M. Robbins, chairman of the MBA. "While we continue to try to get our arms around the full scope of the problem, the MARI report significantly helps the industry better understand where we need to focus efforts in defending our companies and communities against mortgage fraud as it increases in frequency across the nation."
MARI provides MBA members the annual reports as well as discounted fees to participate in MARI's database, MIDEX. The MIDEX system allows mortgage lenders, insurers and agencies to exchange information about companies and professionals that have been involved in loan transactions containing alleged fraud or material misrepresentations. MARI also offers the Mortgage Fraud Alert System, which issues periodic alerts to subscribers about suspicious activities related to mortgage lending.
Those interested in obtaining a copy of the full report can visit http://www.mari-inc.com.
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