Top 5 States for Mortgage Fraud

The sunny state of Florida takes dubious honors.


In a recent report, the Mortgage Asset Research Institute listed the nation's "top five mortgage fraud states" for the first three months of 2008.

From the Mortgage Asset Research Institute, via Mortgage Insider:

State Rankings

As shown in Table 1 below, Florida owns the top spot as the state with the most properties with material misrepresentation submitted by MARI subscribers for loans originated during the first quarter of 2008. Twenty-four percent of all incidents submitted nationwide were for properties in Florida. California ranks second, followed by a three-way tie for third place among Illinois, Maryland, and Michigan.

Table 1

1Q 2008 Mortgage Fraud Rankings by State1

 1  Florida
 2  California
 3  Illinois
 3  Maryland
 3 Michigan

The majority of reports submitted for Florida and California involve properties near the coastline. The Miami MSA boasts 49 percent of all of the reports submitted for properties in Florida. In California, 52 percent of the properties with misrepresentation are in the Los Angeles MSA.

Major urban areas also score the highest in Illinois, Maryland, and Michigan. Ninety-four percent of investigations in the state of Illinois are for properties in the Chicago MSA. In Maryland, 25 percent of reports are in the Baltimore MSA. In addition, the Detroit MSA encompasses 56 percent of all of the misrepresentation reported for Michigan. . . .

The data presents a number of interesting trends:

  • In general, misrepresentation on the mortgage application trends high in each of the states.
  • Income and employment misrepresentation on the mortgage application rank high in Florida, California, Illinois, and Maryland. Florida and Maryland report higher income than employment misrepresentation, and California and Illinois report slightly higher employment than income misrepresentation.
  • Michigan shows a high percentage of asset and debt misrepresentation on the mortgage application.
  • Appraisal misrepresentation (including value inflation and incorrect use of comparables) is most prevalent in Michigan.
  • Maryland has an abnormally high percentage—69 percent—of tax return and financial statement misrepresentation.