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Florida tops mortgage fraud list

August 26, 2008|From the Associated Press

NEW YORK — Reported incidents of mortgage fraud in the United States jumped 42% in the first quarter of 2008 from a year earlier, with Florida reporting the highest number of cases, according to industry data released Monday.

Florida properties accounted for nearly a quarter of all mortgage fraud incidents, the Mortgage Asset Research Institute said.

California ranked second, followed in a three-way tie by Illinois, Maryland and Michigan.

The report is based on data submitted by institute subscribers about loans that were originated in the first quarter and have since been classified as fraudulent.

The most common mortgage fraud cases included misrepresented income, employment history, debt and assets. In Maryland, for example, an unusually high proportion of cases -- 69% -- involved tax return and financial statement misrepresentation.

Mortgage fraud has represented about $1 billion in losses over the last decade, the Mortgage Bankers Assn. has said.

The increase in reported incidents comes as lenders raise credit standards in the face of rising foreclosures. Critics charge the industry with being too lax in vetting risky borrowers during the boom, which fueled an overheated housing market.

But the stricter requirements have done little to curb fraud.

"Tightening credit standards by itself doesn't eliminate fraud," said Merle Sharick, vice president and national manager of business development for the Mortgage Asset Research Institute, especially in markets that typically attract a lot of speculators such as Florida and California.

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