Mortgage originators may find themselves with more of a need for fraud prevention software than in past years. A new report found that up to $13 billion of residential mortgages originated in 2012 could contain more fraudulent information, up from $12 billion in 2010 and 2012.
CoreLogic’s National Mortgage Fraud Index, which measures a number of different types of risk related to mortgage fraud, including occupancy, employment and property risk, grew by 6 percent since last year. The study found that both employment and identity fraud have increased, and combined with more mortgage originations, the number of possible fraudulent loans grew.
Employment risk played the largest role in the occurrence of fraudulent mortgages, especially in areas with the highest unemployment rates, including Arizona, Nevada and Florida. The rate of employment-related fraud grew by 50 percent since 2011.
On the other hand, the number of income-related fraud incidents has been decreasing, likely because more loan originators have made a habit of asking for tax information. The rate has been flat since last year.
Using software tools to reverse the trend
Since 2006 – when fraudulent mortgages hit a peak of $28 million – the number has greatly decreased, even if a given the rise since last year. Mortgages and other loans remain a huge contributor to the rebuilding of the economy and many reports have shown the need to increase lending for a faster recovery.
For loan and mortgage originators, risk management and fraud prevention software can allow financial institutions to increase originations to qualified buyers while also protecting themselves from foreclosures and fraudulent mortgages.
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