BiggerPockets

Mari Statistics Show That Mortgage Fraud Still Stands At All Time Highs

The numbers of mortgage fraud are coming back as rather shocking in a brand new report issued by The Mortgage Asset Research Institute (MARI), which oversees and compiles mortgage fraud numbers by utilizing an in depth analyzing system that compiles numbers from many different national databases and produces accurate estimates of mortgage fraud both by demographic and region, as well as by state and nationally. While a majority of the current housing slump and the credit crisis have been caused by many subprime borrowers walking on bad home loans that they got swindled into, home loan fraud has also contributed greatly to the shocking number of lenders who are writing off vast portions of once healthy portfolios to account for the biggest losses that most of them have ever seen in their corporate history.

Of the leading states that are currently plagued by mortgage fraud, Florida takes the cake, as the MARI Quarterly Fraud Report suggests, by representing better than 24% of all misrepresentations of mortgage fraud nationally. Second in line is California, who respectively etches to second above Illinois, Maryland and Michigan, which are all, tied for third place. The types of fraud that MARI tracks are only those that are reported by financial institutions-many are not required to report mortgage fraud-so the true numbers are never really known. But all federally insured financial institution are required by law to submit a SAR (suspicious activity report) when they suspect that home loan fraud is a culprit in one of their borrowers going bust.

Most commonly, the type of fraud that perpetrated was material misrepresentation of assets or income, and job types. This is in part fueled by the continued fallout of the subprime loans, many of which were issued to borrowers who have unfavorable credit histories and who had far lower incomes than their mortgage applications reflect. This can also in turn be traced back to many unscrupulous mortgage loan officers who urged borrowers with lower incomes to lie on their applications so that they could push another loan through and garner a hefty commission check. Of course when the low introductory teaser rates reset on many of subprime loans, borrowers who had signed on the dotted line with lower incomes could never hope to be able to repay the amounts due monthly. As a result of this laniary, lenders saw vast portions of their portfolios turn to dust and losses, causing many to seek bankruptcy protection and in turn causing many others to be either bought out, seized by the government or to go flat out of business.

MARI is able to compile relevant statistics on mortgage fraud by utilizing the Mortgage Industry Data Exchange (MIDEX) database, which is a database of compiled mortgage fraud reports from many participating lenders in the mortgage industry. The point of using such quarterly fraud reports is to both education lenders and to help prevent fraud from occurring in the first place by identifying suspicious activities amongst borrowers and applications and knocking fraud out before it can get started. Currently there are more than 600 lenders and mortgage industry organizations and companies that report to MARI and the numbers will be increasing with each year as more banks sign on to help fight the waves of mortgage fraud that are still sweeping the country as a whole. The hopes of implementing a mortgage fraud fighting tactic like MARI is to help banks curb fraud by banding together and stamping it out before fraud even can take roots and cause them more losses in the future.

Comments

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  Jim Wineinger — about 2 years ago

  Time for an update as to the continuing of these frauds vs the continuing failures by region and state.