Magazine article Mortgage Banking

Florida Tops MBA/MARI Report on Mortgage Fraud in 2005

Magazine article Mortgage Banking

Florida Tops MBA/MARI Report on Mortgage Fraud in 2005

Article excerpt

Florida held the dubious distinction of being the state with the most reported cases of mortgage fraud against lenders in 2005, while overall there was a dramatic increase in the incidence of mortgage-related suspicious activity reports (SARs) last year, according to a report by the Mortgage Asset Research Institute Inc. (MARI), Reston, Virginia.

Commissioned by the Mortgage Bankers Association, the MARI report--Eighth Periodic Mortgage Fraud Case Report to Mortgage Bankers Association--noted that Utah, Georgia, Colorado and Illinois rounded out the top five states with the most reported mortgage fraud in 2005.

Even as Florida moved to the top of the list--after ranking second and third, respectively, during the previous two years--Georgia, which had led the nation in total reported mortgage fraud from 2002 to 2004, dropped to third place.

Georgia's improved position is likely due to aggressive enforcement efforts at the state level, including passage of the Georgia Residential Mortgage Fraud Act in 2005, according to Kurt Pfotenhauer, MBA's senior vice president of government affairs.

"The mortgage industry has come together to combat the burgeoning crime of mortgage fraud against lenders and innocent consumers," said Pfotenhauer. "Yet, mortgage fraud continues to increase and affect more and more companies and communities. The MARI report helps the industry understand where we need to focus our efforts in combating mortgage fraud."

Colorado and Illinois have showed steadily increasing problems with fraud over the past five years, the report noted. Colorado was No. 21 in 2001 and is currently ranked fourth in highest number of reported fraud cases, while Illinois rose from 11th place in 2001 to fifth place in 2005. South Carolina showed the greatest improvement in its MARI Fraud Index, moving from being the state with the highest number of cases in 2001 to No. 19 in 2005.

Meanwhile, the MARI report found a related increase in both SARs submissions and in attention to fraud. Citing figures by the Financial Crimes Enforcement Network (FinCEN), MARI noted that the incidence of SARs rose to approximately 23,000 in 2005 compared with 18,300 in 2004 and about 9,500 in 2003. …

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