Florida topped the list of states with mortgage fraud for the second year in a row according to MARI, the Mortgage Asset Research Institute.
Nevada, Michigan and California and Utah round out the top five while Illinois dropped to eighth on the list for mortgage fraud. Georgia, Virginia, New York and Minnesota had the dishonor of making it into the top ten states that led the country in mortgage fraud.
Every year, MARI issues the state rankings based on mortgage fraud data received in its MIDEX database. MIDEX stands for Mortgage Industry Data Exchange.
The 2007 report “is an indication of the submissions we receive from our subscribers about where they’ve seen (mortgage) fraud or misrepresentation on 2007 originations,” said Merle Sharick, a mortgage fraud expert and vice president and national manager for business development at MARI.
The mortgage fraud report illustrates that mortgage fraud is now nationwide, and no longer just concentrated in California, Florida, Texas and several high population states along the East Coast.
“It’s kind of spread across the country now,” Sharick said, “and particularly in the Midwest, I think mortgage fraud has been perpetrated or propelled a little by some regional economic problems.” He cited the failing auto industry as an example of a regional mortgage fraud problem in Ohio and Michigan.
“We’re in a transition period,” Sharick said, “hopefully as 2008 progresses the mortgage market will stabilize. Hopefully a little farther down the road the real estate market will stabilize.”
The MIDEX database used by MARI was created in 1990 by a group of mortgage industry participants including Fannie Mae, Freddie Mac, private mortgage companies and mortgage lenders to keep track of bad actors in the mortgage industry according to Sharick.
The mortgage fraud database tracks information from mortgage sources that seem to represent two contrasting sides of mortgage fraud. “It has a public side which has financial sanction information from over 200 government regulators, then it also has a non-public side which is derogatory information which comes in from our 700 subscribers,” Sharick said describing the mortgage fraud database.
This method allows for anonymous individuals to rebut or add to the official public records on a specific mortgage transaction to provide a more full picture of how a mortgage fraud occurred.
Published: Jun 26, 2008