Colorado Home Loan Fraud Falls to Ninth in U.S.
Colorado slipped to ninth place nationwide in terms of mortgage fraud in 2006, continuing a decline seen since 2004, according to a report.
The Mortgage Asset Research Institute reported that Colorado’s new ranking compares with a fifth-place showing in 2005 and third place in 2004.
The top 10 states for mortgage fraud in 2006, according to MARI’s report were, in order: Florida, California, Michigan, Georgia, Utah, New York, Illinois, Minnesota, Colorado and Nevada.
Colorado’s fraud problem, as measured by MARI’s Mortgage Fraud Index (MFI) also declined. In 2006, it was 108, meaning the number of Colorado home loans with misrepresentation was 8 percent higher than what MARI would have expected based on its origination volume.
In 2005, Colorado mortgage problems escalated and its MFI was 154, meaning its fraud rate was 54 percent greater than expected given its loan volume.
In 2004, the state’s MFI was even higher at 205.
Although it remained in the top 10 nationally, Colorado - along with Georgia, Illinois and Michigan - reported fewer fraud cases than in 2005, a positive trend for home loan seekers in the state.
In terms of subprime, or bad credit mortgage loan origination, Colorado’s rank slipped to 10th in 2006, with an MFI of 120. That was down from seventh place in 2005 (MFI: 176) and fourth in 2004 (MFI: 173).
The report reflects reported fraud in home loans originated within the same year. Nationwide, the most common types of fraud found in 2006 originations were in employment history and claimed income.
The number of fraud reports submitted to MIDEX, a central U.S. database for mortgage broker, home loan lender groups, agencies and insurers, surged 30 percent in 2006.
The cooling of housing markets over the past year may have helped reveal cases that might have been masked by price appreciation in past years.
California, Arizona and New Jersey all saw a doubling of reported home mortgage loan fraud cases in 2006 compared with 2005.
SOURCE: Denver Business Journal
