Mortgage cheaters get crafty as overall fraud declines
While mortgage fraud is on the decline overall, persistent cheaters are now turning to an especially dangerous scam: inflating their incomes and assets.
In the second quarter of 2013, more than 13 percent of dishonest mortgage applicants misrepresented how much money they made, marking a 7.5 percent jump from the previous quarter, according to researchers at CoreLogic cited by CNBC. Overall fraud, meanwhile, dipped 5.6 percent in the second quarter from the same time a year prior, and fraudsters purposely over- or undervaluing a home — a common shady practice before home prices began to rise — dropped 7.1 percent.
As new federal regulations force lenders to prove borrowers are capable of repaying their loans, increased scrutiny has prompted would-be borrowers to artificially fluff the numbers.
And though stricter underwriting is curbing the propensity to commit fraud overall, the dollar value of fraud is rising simply due to growing loan volumes. Fraudulent residential mortgage loan applications totaled an estimated $5.3 billion nationally in the second quarter of 2013, down from $5.5 billion in the second quarter of 2012 but up slightly from $5.2 billion in the previous quarter. Fraudulent loan applications reached a combined value of approximately $10.5 billion for the first half of 2013.
New York, along with California, Florida, Texas and Virginia, the states with some of the nation’s highest home values, also held the dubious distinction of holding the highest estimated value of fraudulent mortgage applications. [CNBC] — Julie Strickland