Fears Brew Over Mortgage Fraud in Jumbo Loans
November 22, 2013
The growing popularity of jumbo loans is increasing the potential for mortgage fraud with these high-priced loans, according to Interthinx in its latest mortgage fraud risk report.
In recent months, jumbo rates, in some cases, have been lower than conforming rates, leading to them grow in popularity.
"With the rise in popularity of jumbo loans, lenders must be aware of both the credit risk and fraud risk those loans carry," says Ashley Woodworth, Interthinx vice president of business development and corporate strategy.
"While the most significant fraud risk gap occurred in the area of employment/income, it certainly wasn’t the only area where risk was present. Occupancy fraud risk for jumbos, for example, was extremely high — more than 200 by our index versus 150 for non-jumbo loans. The risk is out there, and lenders need to be aware.”
Interthinx notes that the states most at risk for mortgage fraud are: California, Washington, D.C., Delaware, Montana, Hawaii, Florida, Alaska, Utah, Connecticut, and Nevada.
“As we predicted last quarter, the shift toward a purchase-driven mortgage market increases the risk of fraud,” says Jeff Moyer, president of Interthinx. “Our goal in issuing this report is to make lenders aware of the fraud risk trends we’ve observed in the market so that they can remain vigilant in preventing those trends from becoming widespread issues within their own organizations."
Source: “Mortgage fraud risk rises as jumbos attract more attention,” HousingWire (Nov. 20, 2013)
Updated: January 23, 2020