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CU System
Loan Applications Fraud Up 38% In Calif., Mass. Cities
LOVELAND, Colo. (7/25/13)--The metropolitan areas of Sacramento, Calif., and Barnstable-Yarmouth, Mass., saw potential fraudulent activity related to mortgage loan applications spike nearly 38%, compared with a national increase of 1.06% during the first quarter of 2013, according to new data.
 
Credit unions and other mortgage lenders in 10 metropolitan statistical area (MSAs) will need to be extra alert to potential fraud on loans, said Kroll Factual Data Inc., based in Loveland, Colo.
 
Despite the modest national uptick in potential fraud, certain MSAs experienced a see-sawing of fraud from the fourth quarter of 2012 to the first quarter of 2013, Kroll said. Kroll provides independent verification services to mortgage lenders, including credit unions.
 
"What is most notable this quarter is not only that data showed a nearly 38% increase of potential fraud in applications from Sacramento, Calif., and Barnstable-Yarmouth, Mass., but that these two MSAs were in the top three last quarters of geographies showing decreases," said Kroll President Rod Bazzani.
 
The drop "is a reminder to lenders that they cannot let their guard down when it comes to ensuring the integrity and accuracy of mortgage application data," Bazzani said.
 
The company examined MSAs with at least 1,000 loan applications per quarter and, using risk analysis and verification engines, isolated certain files that may contain indicators of potential mortgage origination fraud.
 
Sacramento had a 37.9% spike and the two Massachusetts cities a 37.5% increase in potential fraudulent mortgage applications during the quarter. Rounding out the top five MSAs with the highest increases are Wilmington, Del./N.J./Md., with 34.3%; Syracuse, N.Y., with nearly 26.2%, and Fort Pierce-Port St. Lucie, Fla., with almost 25%. 
 
Other cities with the highest potential fraud increases included:
  • Phoenix-Mesa, Ariz., with 20.7%;
  • Lubbock, Texas, with 20.5%;
  • Seattle-Everett, Wash., 16.9%;
  • Iowa City, Iowa, 14.3%; and
  • Kansas City, Mo.-Kan., 14%.
Leading the top 10 MSAs with the biggest decrease in potential fraudulent applications were:
  • Greenville-Spartanburg-Anderson, S.C., down 19.6%;
  • Trenton, N.J., down 17%;
  • Miami, Fla., down 16.2%;
  • Nashua, N.H., down 15.1%;
  • Columbia, Mo., down 15.1%;
  • Nashville, Tenn., down 14.7%;
  • Bridgeport-Milford, Conn., down 14%;
  • Boise City, Idaho, down 13%;
  • San Francisco-Oakland,Calif., down 11.8%; and
  • Cincinnati, Ohio-Ky.-Ind., down 12%.
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