TheMReport — News and strategies for the evolving mortgage marketplace.
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AROUND THE U.S. ANALYTICS Risk Takers Second-quarter findings from Interthinx show that the risk of mortgage fraud is on the rise around the U.S., and the company's in-depth Fraud Risk Indices reveal which areas of the country are the most vulnerable. Battle of the Sectors: Are Lenders at Greater Risk for Mortgage Fraud in the Single-Family or Condominium Market? U.S. Mortgage Fraud Risk Index: Condos presented slightly more mortgage fraud risk than single-family proper- ties during the second quarter, with Interthinx's statistics showing that loans on condos were 0.4 percent more likely to in- clude fraudulent behavior. SINGLE-FAMILY RANKING: 147 CONDO RANKING: 148 Property Valuation Fraud Risk Index: Second-quarter tallies showed that the risk of property valuation fraud was 8.3 percent higher for single-family units versus condos. Identity Fraud Risk Index: When handling mortgage loans for condos, lenders are 7.2 percent more likely to be exposed to the risk of identity fraud as compared to single-family findings. Occupancy Fraud Risk Index: The risk of occupancy fraud rises when lending money for condos, with a 3.2 percent difference be- tween index rankings for the two property types. Employment/ Income Fraud Risk Index: Indicating a serious dis- crepancy in the employ- ment/income fraud risk seen in mortgages for both sectors, loans related to condos are 22.4 percent more likely to be subject to such risks. SINGLE-FAMILY RANKING: 229 CONDO RANKING: 210 SINGLE-FAMILY RANKING: 147 CONDO RANKING: 158 Mortgage Fraud Risk Index Ranking ALABAMA ..................................100-150 ALASKA .......................................100-150 ARIZONA ............................................200+ ARKANSAS ................................100-150 CALIFORNIA ............................150-200 COLORADO .............................150-200 CONNECTICUT ......................150-200 DELAWARE ...............................100-150 DISTRICT OF COLUMBIA .150-200 FLORIDA .....................................150-200 GEORGIA ....................................150-200 HAWAII .........................................150-200 IDAHO ............................................100-150 ILLINOIS ......................................150-200 INDIANA.......................................100-150 IOWA ................................................50-100 KANSAS .........................................50-100 KENTUCKY ................................100-150 LOUISIANA ................................100-150 MAINE ..............................................50-100 MARYLAND ...............................100-150 MASSACHUSETTS ...............100-150 MICHIGAN ..................................150-200 MINNESOTA .........................................150 MISSISSIPPI ..................................50-100 MISSOURI ....................................100-150 MONTANA ....................................50-100 NEBRASKA ................................100-150 NEVADA ..............................................200+ NEW HAMPSHIRE ................100-150 NEW JERSEY ..........................150-200 NEW MEXICO...........................100-150 NEW YORK ...............................150-200 NORTH CAROLINA ..............100-150 NORTH DAKOTA ......................50-100 OHIO ..............................................150-200 OKLAHOMA ..............................100-150 OREGON .....................................150-200 PENNSYLVANIA ....................150-200 RHODE ISLAND .....................100-150 SOUTH CAROLINA .........................150 SOUTH DAKOTA ......................50-100 TENNESSEE .............................150-200 TEXAS ...........................................100-150 UTAH ...............................................100-150 VERMONT ...................................100-150 VIRGINIA ......................................100-150 WASHINGTON .........................100-150 WEST VIRGINIA........................50-100 WISCONSIN ..........................................150 WYOMING ..................................100-150 SINGLE-FAMILY RANKING: 65 CONDO RANKING: 67 SINGLE-FAMILY RANKING: 106 CONDO RANKING: 132 SIGNIFICANTLY LESS NO SIGNIFICANT DIFFERENCE SIGNIFICANTLY GREATER About the Survey: The Fraud Risk Indices are calculated based on the frequency with which indicators of fraudulent activity are detected in mortgage applications processed by the Interthinx FraudGUARD®system, a leading loan-level fraud detection tool available to lenders and investors. The Interthinx Fraud Risk Indices consist of the Mortgage Fraud Risk Index, which measures the overall risk of mortgage fraud, and the Property Valuation, Identity, Occupancy and Employment/Income Indices, which measure the risk of these specific types of fraudulent activity. The Mortgage Fraud Risk Index considers 40+ indicators of fraudulent activity including property mis-valuation; identity, occupancy and employment/income misrepresentation; non arms-length transactions; property flipping; straw-buyers; "silent seconds"; and concurrent closing schemes. The four type-specific indices are based on the subset of indicators that are relevant to each type of fraudulent activity. Each Index is calibrated so that a value of 100 represents a nominal level of fraud risk, a value calculated from the occurrence of fraudulent indicators between 2003 and 2007 in states with low foreclosure levels. For all five indices, a high value indicates an elevated risk of mortgage fraud and each Index is linear to simplify comparison across time and location. 70 | THE M REPORT SECONDARY MARKET ANALYTICS SERVICING ORIGINATION