Business NEWS

Sudden growth in U.S. MBA’s Mortgage Applications is a big question!

By Amarendra Bhushan for CEOWORLD Magazine Updated:December 3, 2008

As borrowers misstated their financial information to maneuver around tighter lending standards, industry data, mortgage fraud grew by 45 percent in the second quarter compared to the year-ago period.

But what i think is fraud reports are increasing, partly because lenders are scrutinizing applications and industry professionals more closely to reduce risk. And in this case lenders need better tools to find inconsistencies in mortgage applications.

Spotlight:

- Mortgage fraud grew by 42 percent in the second quarter compared to the year-ago period.

- Some basic examples of fraud included false bank statements made on computers and pay stubs with white correction liquid on them.

- Mortgage fraud has cost lenders about $1 billion over the past decade.

- 65 percent of fraud incidents in the first two quarters were categorized as general application misrepresentation of the buyer’s true name or assets.

- The mortgage bankers’ purchase index increased to 261.6 last week, from the prior week’s reading of 248.5.

- Mortgage organizations need better technology tools to evaluate applications.

- More collaboration is needed between mortgage organizations.

- Mortgage organizations need to stop suspicious loan applications at the beginning before they go into the origination stage — the stage where most of the fraud occurs.

Reported incidents of mortgage fraud in the U.S. increased by 45 percent on fewer loan applications in the second quarter of 2008 from a year ago, according to a new report released today by the Mortgage Asset Research Institute (MARI(SM)), a LexisNexis service. The MARI Quarterly Fraud Report is based on data submitted by MARI subscribers on loans originated in the second quarter of this year that have since been classified as fraudulent.

Key findings from the MARI Quarterly Fraud Report include that fraud most often occurs at the beginning of the loan process. More than 65 percent of fraud incidents are attributed to “General Application Misrepresentation” — a trend that has continued over the past two quarters. General Application Misrepresentation is when information such as when an incorrect name, occupancy or asset is potentially misrepresented during the application process. This fraud trend is followed closely by reported misrepresentations related to “Income” at 36 percent of Q2 applications and “Employment” at 20 percent of Q2 applications.

Like this article! ‹ A report on: Electricite de France targets US Constellation Energy again Rowan Names W. Matt Ralls New CEO and President and Appoints Jack Lentz Chairman of the Board ›
Share this Post: Get It Delivered To Your Inbox