Mortgage Fraud Is Back on the Rise
October 10, 2017
More borrowers are being dishonest on their mortgage applications.
Read more: How Equifax Breach Could Hurt Home Sales
Mortgage fraud risk is up by nearly 17 percent in the most recent 12-month period, according to CoreLogic, a real estate data firm. “Occupancy” fraud is rising the fastest, in which applicants deliberately misrepresent their intended use of the property. For example, a client may tell a lender that they plan to live in the house when they really intend to rent it out. Applicants who live in the house usually qualify for lower interest rates and down payments than those who intend to rent out a home.
One in every 122 mortgage applications contained application fraud during the first two quarters of 2017, says Bridget Berg, CoreLogic’s senior director of fraud solutions strategy. Berg says common misrepresentations on the applications tended to center around the sources of down payment funds; income amounts and employment; and the amount of debt.
Further, the recent hack of personal data from the credit bureau Equifax may increase the risk in the upcoming months, warns Mark Fleming, chief economist for First American Financial Corp. About 145.5 million consumers’ credit files were compromised, and Fleming says that could open the door for more forms of application fraud.
“The risk of identity-based fraud and misrepresentation is certainly elevated,” Fleming says. “To the extent that more people have their information out there,” the danger is greater.
Source: “Mortgage Fraud Is on the Rise, and Here’s What That Means to You,” Miami Herald (Oct. 9, 2017)
Updated: August 11, 2020