Mortgage Asset Research Institute’s 2009 Report

[David Rasmussen]

The following is a portion of the reports conclusion

The information contained in the Mortgage Asset Research Institute’s 2009
Report serves as a wakeup call for the industry that mortgage fraud is
worsening, not improving. It falls to the valuation analytics and technology
sector to provide an effective line of defense against appraisal fraud and
collateral risk, and we are up to the task. We are having significant success
at finding predictive, effective solutions to address this challenge.

Again as before Appraisers are the weak link and technology is the saving grace.
In this lengthy report are BPOs even mentioned as possibly a contributing factor. But of course as everybody knows a BPO is an appraisal!

 

[Mike Kennedy]

"The top fraud incident type in 2009 – representing 59 percent of all reported fraud types – was application misrepresentation. This is the sixth year in a row it has topped the list. In second place were frauds related to appraisal and valuation misrepresentation, which increased from 22 percent of reported misrepresentation in 2008 to 33 percent; with an 11-percent increase, this is the most notable increase in reported fraud types in 2009. Additional documented fraud types included, in order of volume, verifications of deposit, verifications of employment, escrow or closing costs, and credit reports. Overall there has been a slight downward trend in total application fraud and misrepresentation moving from a high of 67 percent in 2005 to 59 percent in 2009."

http://www.lexisnexis.com/risk/newsevents/press-release.aspx?id=1272033698698305

The full report, as well as previous year's reports, is available on the LexisNexis Mortgage Asset Research Institute Web site at: http://www.lexisnexis.com/risk/fraudreport

___________

Having tracked their reports for several years, what is typically understated is the VERY low volume of SARS (suspicious activity reports) filed by Lenders prior to 2008.

Substantially increased LOAN BUYBACKS 2007-2010 fueled a substantial increase in SARS and Forensic Reviews accompanied by increases in FINCEN (FBI and other LE Agencies) investigations and prosecutions by the U.S. Attorneys General across the country. The volume of SARS has been dramatically increasing contributing to the correspondent increase in apparent "Mtg.Fraud".

It should be noted that MARI makes no distinction between fraudulent appraisals completed by Appraisers directly and forged appraisals doctored by NON-appraisers.

 

[Elliott]

Fraud is one problem, but I've heard a number of bank types and reporter types
say they are seeing people who have no equity in their homes make the decision
not to pay their mortgages, it gives them a boost in income and they'd much
prefer to make car payments and credit card payments. The estimate is that
this kind of 'decision' has put $8 billion of consumer spending into the economy
Go figure. Its not our parent's Kansas anymore.