Released: August 31, 2008

Mortgage fraud up sharply

Source: Kenneth Harney, Los Angeles Times (Free Registration)

You might assume that with home purchases and new mortgage volume off by 30% or more in many markets during the last year, loan fraud would be down as well.

Wrong. A benchmark quarterly study released Monday by the mortgage industry’s principal compiler of fraud reports, the Mortgage Asset Research Institute, or MARI, found that the number of cases jumped by 42% between the second quarter of 2007 and the same period this year.

They included hoked-up income verifications and credit reports, falsified employment records, financial assets illegally “rented” to buyers to beef up their loan applications, inflated appraisals, straw-buyer scams and a wide variety of hanky-panky schemes among sellers and purchasers designed to fool lenders.

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