6 Types Of Mortgage Fraud

Fraud is most common in conforming mortgages with loan-to-value ratios of 80 percent or less, according to CoreLogic. The metro areas with the highest increases of fraud risk year over year are Oklahoma City; El Paso, Texas; Springfield, Mass.; Albuquerque, N.M.; and Spokane, Wash. Overall, the states with the highest incidences of mortgage fraud are New York, New Jersey, and Florida, according to the report.

CoreLogic identifies the following as the most common types of mortgage fraud:

• Income fraud: An applicant misrepresents the existence, continuance, source, or amount of their income.
• Occupancy fraud: An applicant deliberately misstates the intended use of a property as a primary or secondary residence or an investment.
• Transaction fraud: The applicant misrepresents the nature of the transaction, such as an undisclosed agreement between parties, falsified down payments, non-arm’s-length sale, or use of a straw buyer.
• Property fraud: An applicant intentionally misrepresents information about the property or its value.
• Undisclosed real estate debt: An applicant fails to disclose additional real estate debt or previous foreclosures.
• Identity fraud: An applicant alters their identity or credit history, or uses a false identity.

The largest uptick—22 percent—was in income fraud over the past 12 months, according to CoreLogic. Massachusetts, Colorado, Utah, Nevada, and Kansas have seen the most significant increases in income fraud over the past year, according to the report.