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Mortgage fraud rising, three people being sent to federal prison

Lexis Nexis’ MARI report is out

MortgageThe Mortgage Asset Research Institute has released their twelfth mortgage fraud case report, revealing that mortgage fraud is still on the rise although the velocity has slowed from a 26% increase in 2008 to a 7% jump in 2009.

Misrepresentation of information on loan applications accounted for 59% of incidents followed by fraud appraisals, up 11% from 2008.

“It remains critical for those in the mortgage industry to reassess their processes, work together by sharing information and reporting incidents of fraudulent activity, and ready themselves for more complex schemes in order to continue the fight against mortgage fraud,” says Denise James, a co-author of the report.

Three charged with fraud

Officials are not treating mortgage fraud lightly- just today, three people were charged for mortgage fraud conspiracy in Mississippi according to Louis Gholar, Undrea Harris and Santiago Sutton were sentenced in a U.S. District Court and ordered not only to serve time but to pay restitution for conspiring with Carla Wilson who owned Home Mortgage Center, LLC to “fabricate documents (including false verifications of deposit, false verifications of rent, false forms to verify income, false W-2 forms, false tax returns, false verification of employment, false residential lease agreements and altered official bank checks) and give false information to lenders to fraudulently obtain residential mortgage loans for borrowers who did not qualify financially to receive the loans, and thereafter conduct financial transactions to disburse funds from the proceeds of that fraud to their co-conspirators to induce them to continue their participation in the conspiracy and to conceal the nature, ownership and control of the proceeds of the wire and mail fraud.”

Top 10 states hit hardest by fraud

Mississippi did not make the top 10 list for states where mortgage fraud hit the hardest in 2009, but the list indicates change. Florida experienced three times the expected amount of reported mortgage fraud considering the volume of loans there. Eastern states accounted for 80% of the top ten list.

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  1. Florida
  2. New York
  3. California
  4. Arizona
  5. Michigan
  6. Maryland
  7. New Jersey
  8. Georgia
  9. Illinois
  10. Virginia

New York City experienced the highest mortgage fraud rate of any MSA in America followed by Los Angeles second and Chicago third.

CC Licensed image courtesy of revdancatt via

Tara Steele is the News Director at The American Genius, covering entrepreneur, real estate, technology news and everything in between. If you'd like to reach Tara with a question, comment, press release or hot news tip, simply click the link below.


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