Thread: Florida leads U.S. in mortgage fraud

Florida leads U.S. in mortgage fraud

By JEFF OSTROWSKI
Palm Beach Post Staff Writer
Friday, March 14, 2008

For the second year in a row, Florida earned the dubious distinction of ranking first in the nation in mortgage fraud, according to a study released Thursday by the Mortgage Bankers Association, a trade group, and the Mortgage Asset Research Institute, a division of Atlanta-based ChoicePoint.

Law enforcement didn't wait for the list.

The FBI recently created a Palm Beach County mortgage fraud task force, and the Florida Department of Financial Services has added an investigator to its mortgage fraud team in West Palm Beach, DFS Detective Theodore Padich said.

That follows last year's move by the U.S. Attorney's Office for the Southern District of Florida to make mortgage fraud a priority.

Georgia, once a perennial No. 1 in the mortgage fraud ranking, used a law-enforcement crackdown to clean up its fraud problem, ChoicePoint Vice President Merle Sharick said. But in Florida, "it's too soon to see the effect."

While mortgage fraud has been rampant in Palm Beach County, few scammers have been prosecuted because the cases are so difficult to pursue, Padich said. Investigating requires time-consuming subpoenas of documents from lenders, title companies and real estate agents.

"I don't think we're going to scratch the surface," Padich said. "Part of the reason is that we luck into cases. We get a phone call from someone, or we get curious about something and look into it. But there's no requirement for the industry to report fraud, and that hampers us."

Because mortgages are complicated transactions, most loan scams are pulled off with the help of an insider - a mortgage broker, appraiser or title agent who can fudge the numbers. The sheer volume of speculation and second-home purchases by out-of-state and foreign buyers makes Florida ripe for fraud, Sharick said.

"When you have investors who are speculating in a marketplace, you're going to see, in my view, a higher incidence of fraud," he said. "Mortgage fraudsters who are in this to steal have identified Florida as a place to go."

The ranking released Thursday was based on fraud complaints reported by lenders in 2007. The Mortgage Bankers Association and Mortgage Asset Research Institute didn't disclose numbers of complaints, and they said the dollar value of fraud is impossible to calculate.

Last year, the most common types of fraud involved lies about the borrower's job history and income, the study said.

"The current mortgage market conditions will have more professionals chasing a smaller pool of conforming business," the report said. "There will be even greater pressure on all industry players to generate volumes. Professional fraudsters will devise new and improved schemes to exploit the weaknesses in the current market."

Skyrocketing foreclosures are one symptom of mortgage fraud. Florida suffered the nation's third-highest foreclosure rate last month, with one in every 254 households receiving a foreclosure filing during the month, research firm RealtyTrac said Thursday.

Florida trailed only Nevada and California in percentage of homes in foreclosure, Irvine, Calif.-based RealtyTrac said. In all, there were 32,447 foreclosure filings in the state in February, up 69 percent from February 2007.

http://www.palmbeachpost.com/business/c ... _0314.html

In reality the banks are getting what they deserve. We are #5 on the list. Utah? Yep believe it.