According to LexisNexis Mortgage Asset Research Institute, reported mortgage fraud incidents fell 41 percent between 2009 and 2010. The news marks the first reduction in several years, according to the report.
The report suggests that tightened standards are making it tougher for perpetrators to commit fraud.
Even with the reduction, the Treasury Department estimates that fraud still accounts for more than $1.5 billion in annual losses to the real estate market. The Mortgage Asset Research Institute’s report believes the losses to be much higher than the Treasury’s estimate.
“The industry is plagued with vulnerabilities within the origination process that expose lenders to risk,” according to the Institute.
Florida tops the list with the largest amount of mortgage fraud-it has done so for the last five years.
Illinois and Michigan were the only two states in the Top 10 of the list that actually demonstrated declines. According to many Chicago bankruptcy and foreclosure attorneys , the biggest source of fraud involves the mortgage application, where borrowers misrepresent their financial situation or their identity. The second most common area of fraud is in the appraisal or valuation of the property itself. Short sales and foreclosure follow in droves.