Despite the mortgage industry’s recent decline in fraud risk, CoreLogic reports that 1 in 200 home loans still contain misrepresentations that could result in default. Short sales have also become an area of concern due to their growing popularity as a preferred foreclosure alternative. CoreLogic reports that short sale volume from the first quarter of 2008 through the fourth quarter of 2009 increased by more than 300 percent. Nearly 1 in every 200 short sales were deemed “very suspicious” by lenders, meaning there was a new sale transaction less than 60 days after the short sale and the sale price was more than 20 percent higher than the short sale price. Lenders identified income misrepresentation as the most common type of fraud, followed by internal fraud. Also ranking high were falsifications related to borrower identity, occupancy, and the property itself.
Joshua D. Carlson, Esq.