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Mortgage Fraud at an All-Time High According To Mortgage Asset Research Institute (MARI®) Incidents of Mortgage Fraud Increase 26% from 2007 to 2008

Rhode Island, Florida and Illinois Top List of States with Highest Mortgage Fraud Rates

March 16, 2009 — New York, NY, March 16, 2009 - Reported incidents of mortgage fraud in the U.S. are at an all-time high and increased by 26 percent from 2007 to 2008 according to a new report released today by the Mortgage Asset Research Institute (MARI®), a LexisNexis® service. The 11th Periodic Mortgage Fraud Case Report to the Mortgage Banker’s Association (MBA) examines the current state of residential mortgage fraud and misrepresentation in the U.S. based on data submitted by MARI subscribers.

The report found that, for the first time, Rhode Island ranked first in the country for mortgage fraud with more than three times the expected amount of reported mortgage fraud for its origination volume. This is also Rhode Island's first appearance on the MARI report Top-Ten list, indicating a problematic and overlooked mortgage fraud problem in the state. Florida, ranked first in 2007 and 2006, dropped to second place and is followed by Illinois, Georgia, Maryland, New York, Michigan, California, Missouri and Colorado. The report was presented during MBA's annual National Fraud Issues Conference in Las Vegas. It is available on the MARI Web site at: www.marisolutions.com.

"With fewer loan originations today, the data suggests that the economic downturn may have created more desperation, causing more people than ever before to try to commit mortgage fraud," said Denise James, LexisNexis Risk & Information Analytics Group director of Residential Mortgage Solutions. "Not only are we seeing traditional fraud trends, such as application fraud, but we are also seeing new types of emerging fraud occur," said James. "It is therefore imperative that the mortgage industry continue to share information and insights, and collaborate in the fight against mortgage fraud."

The top fraud incident type in 2008 – representing 61% of all reported frauds – was application fraud, the fifth year in a row it topped the list. Second were frauds related to tax returns and financial statements which jumped 60% from 17% of reported frauds in 2007, to 28% of reported frauds in 2008. Additional documented fraud types included, in order of volume, frauds related to appraisals or valuations, verifications of deposit, verifications of employment, escrow or closing costs, and credit reports.

"MARI data shows that mortgage fraud is more prevalent today than it was at the height of the boom in mortgage loan originations," said John Courson, president and chief executive officer of the Mortgage Bankers Association. "This report is essential reading for mortgage bankers who need to understand where mortgage fraud is coming from, what to watch for and how to protect our companies and communities."

The report also found that:

  • After improving in 2006 and 2007, Georgia jumped from seventh to fourth place in 2008;
  • California, ranked fourth in 2007, declined to eighth in 2008;
  • Maryland jumped from fifteenth in 2007 to fifth in 2008; and
  • The volume of reported frauds related to credit reports dropped from 9% to 4% between 2007 and 2008.


MARI provides valuable industry insight derived from its Mortgage Industry Data Exchange (MIDEX®) database, which contains an aggregation of reported incidents of fraud and verified misrepresentations submitted by leading mortgage industry participants. MARI analyzes this industry data and presents reports that depict a national composition of residential mortgage fraud and misrepresentation to support the industry's effort in the fight against mortgage fraud.

About LexisNexis
LexisNexis® (www.lexisnexis.com) is a leading global provider of content-enabled workflow solutions designed specifically for professionals in the legal, risk management, corporate, government, law enforcement, accounting and academic markets. LexisNexis originally pioneered online information with its Lexis® and Nexis® services. A member of Reed Elsevier [NYSE: ENL; NYSE: RUK] (www.reedelsevier.com), LexisNexis serves customers in more than 100 countries with 18,000 employees worldwide.

About Mortgage Asset Research Institute
The Mortgage Asset Research Institute (MARI®) is a premier provider of mortgage fraud prevention solutions and informa

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