Mortgage Fraud Risk Report

The mortgage industry continues to encounter and deal with fraud, especially in light of a challenging economy and real estate market. The Mortgage Fraud Risk Report for fourth-quarter 2009 presents an in-depth analysis of U.S. residential mortgage fraud risk as indicated by the Interthinx Fraud Risk Indices.

Challenge
The mortgage industry continues to encounter and deal with fraud, especially in light of a challenging economy and real estate market. The Mortgage Fraud Risk Report for fourth-quarter 2009 presents an in-depth analysis of U.S. residential mortgage fraud risk as indicated by the Interthinx Fraud Risk Indices.

Results
The Interthinx Mortgage Fraud Risk Index remains elevated but unchanged from the previous quarter’s value. Four type-specific fraud risk indices make up the overall index.

• Property valuation fraud risk decreased 4 percent from the previous quarter, but the index is up 40 percent from last year. Schemes involving short sales, REO inventories, wholesale flipping, and refinancing by borrowers whose equity has been impaired by falling real estate values continue to drive the index.
• Occupancy fraud risk and employment/income fraud risk have also increased.
• Identity fraud risk has remained relatively constant over the last two years.

Techniques
The Mortgage Fraud Risk Index considers more than 40 indicators of fraudulent activity. Analysts calibrate each index so that a value of 100 represents a nominal level of fraud risk. The Interthinx indices are leading indicators based predominantly on the analysis of current loan originations.

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