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Florida among states with most mortgage application fraud risk

On Behalf of | Oct 19, 2018 | Real Estate Transactions |

A recent study found that Florida is among the top three riskiest states for mortgage application fraud. That’s according to the more current Mortgage Fraud Report from the global property information and analytics company CoreLogic. Moreover, Tampa Bay came in eighth among metro areas across the country for application fraud risk.

The risk of mortgage application fraud continues to increase across the country, according to CoreLogic. As of the second quarter of this year, the risk index showed a 12.4 increase over the same time last year — 0.92 percent versus 0.82 percent of mortgage applications. Those were the applications found to contain some indication of fraud.

The CoreLogic Mortgage Fraud Report looks for fraud in six areas:

  • Income
  • Occupancy
  • Transaction
  • Identity
  • Property
  • Undisclosed real estate debt

The first three areas saw the largest increase in risk. The last two showed declines.

An official with CoreLogic noted a key reason for the increase: “Because home prices are rising, and demand is strong, most mortgage fraud in this type of market is motivated by bona fide borrowers trying to qualify for a mortgage. Undisclosed real estate liabilities, credit repair, questionable down payment sources and income falsification are the most likely misrepresentations.”

A spokesman for the Tallahassee Board of Realtors notes that mortgage fraud isn’t always intentional on the part of the applicant. He says that sometimes people fail to list funds that they’ve received during the application process, for example.

A look at the National Mortgage Origination Fraud Index starting in 2010 shows ups and downs until the third quarter of 2016. Since then, there’s been a notable and generally sustained increase. This is true for all types of mortgage loan applications. However, conforming loans have shown the greatest increase in fraud risk.

No one wants their real estate purchase — or their life — complicated by charges of fraud on their mortgage application. If you have been accused of application fraud, an experienced Florida real estate attorney can provide valuable guidance and assistance.