California Loans News

According to California-based data researcher company Interthinx, mortgage frauds related to property valuation has increased to 46 percent compared to a year ago. The company’s study showed that there have been a noticeable number of schemes made against short sales, REO inventories and refinancing by borrowers whose equity was damaged due to the declining real estate values.

Generally, the Interthinx Mortgage Fraud Risk Index poured more than 11 percent from the earlier quarter. This covers the common types of mortgage fraud including property valuation. This data indicated that fraud and its perpetrators have intensely worked up their way in these times of economic and real estate crises.

The data company further stated that “the highest levels mortgage fraud risk correspond closely to the states with the highest levels of foreclosure activity.” And what is more alarming is that over the past year, there has been an increase in geographic concentration of mortgage fraud risk. The company explained, “Despite relatively small variations on the national scale, the range from the lowest to the highest risk state has widened considerably.”

Nevada was reportedly to have the highest risk. On the other hand, DSNews reported that in early October, the state has already launched an “all-out offensive to absolve that title.” Another known foreclosure hotbed is California, which has 7 out of 10 riskiest metro areas in terms of potentiality to these kinds of fraudulent activities. The state’s fraud index represented the largest one-year increase in all states. Interthinx noted that “the highest risk counties were previously confined to the state’s inland region but the risk has now spread to many coastal counties as well.” Arizona and Florida rank 3rd and 4th, respectively, in the Interthinx’s riskiest list. These two locations are also included in the areas deeply affected with high foreclosure trends.

The fraud risk list also included the areas of Charleston, South Carolina, Portland and Bend, Oregon, Minneapolis-St.Paul, Minnesota and Washington, D.C.

Meanwhile, the company’s Occupancy Fraud Risk Index has shown a 30 percent decline compared from a year ago. This index is closely related to schemes concerning speculative investments. This drop was explained to occur because of the consumers’ reduced economic circumstances and the depressed market for residential investment and rental properties. However, the company said, “A very slight increase over the last quarter – the first since the fourth quarter of 2006 – suggests that occupancy fraud risk may be poised for a rebound.”

Another decline in risk of fraud is in terms of employment and income claims, down 35 percent. This may be attributed to the decrease lenders’ growing use of Internal Revenue Service data in income verification. Also, the Interthinx said that the decrease may be because of a reduced need for misrepresentation of income as housing is slowly becoming more affordable.

Analysts of the company still expect that fraud risk may continue to increase in the next three years. This may be due to the wave of adjustable rate mortgage loans (ARMs) to be reset between the remaining weeks of this year and the first quarter of 2012.

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