This article appeared in Real Trends regarding the growth in mortgage fraud particularly in California.  I thought I’d pass this along to my readers for their awareness.   It seems that when the economy gets bad, we also have emerging fraud to contend with as well.

    Interthinx's quarterly Mortgage Fraud Risk Report indicates that most fraud types are on the rise, with increases in the risk index for occupancy fraud, employment/income fraud, and property valuation. The latter is up more than 100 percent from two years ago.
Major findings include the following:
· California has the highest mortgage fraud risk. Nevada, which had the highest index for the previous five consecutive quarters, drops to second place and is closely followed by Arizona. Florida remains in fourth place and Colorado is in fifth place. 
    The occupancy fraud risk index rose 16 percent since last quarter - the first significant increase in the index since Q4 2006. The magnitude of the quarter-on-quarter increase suggests that occupancy fraud risk will be a serious issue going forward, as continuing price declines and get-rich-quick schemes lure investors back into the market and as builders face continuing difficulty in moving unsold inventory.
       Despite a slight (4 percent) quarter-on-quarter decrease, the property valuation fraud risk index is up 40 percent over last year and up more than 100 percent from two years ago. 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 this index.

Don Schaller
Broker/Owner
Schaller Family Realtors
Dickson Realty, Truckee
dschaller@suddenlink.net

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