Early Payment Defaults Linked to Borrower Fraud
The FBI’s Mortgage Fraud Report indicates that up to 70% of early payment defaults may be linked to borrower misrepresentations on mortgage loan applications, according to Rapid Reporting, a Fort Worth, Texas based provider of fraud prevention products and services.
The study found that mortgage defaults were largely concentrated in adjustable rate loans, but occurred among other types as well.
The report also revealed that seven of the 10 states with the highest concentration of mortgage fraud were also among the top 10 states for foreclosures: California, Florida, Georgia, Indiana, Michigan, Ohio, and Texas.
“While it would be naïve to assume that we could narrow the cause of every foreclosure down to one single factor, this FBI information clearly indicates that borrower fraud plays a significant role in the record number of defaults and foreclosures we’ve been seeing over the past couple of years,” said Jay Meadows, chief executive officer for Rapid Reporting.
He said lenders can “significantly reduce” defaulted and foreclosed loans by implementing a good fraud prevention program.
Tags: Mortgage Defaults, Mortgage Delinquencies, Mortgage News
