RI: Highest Rate of Mortgage Fraud

Further light has been shed on why Rhode Island has been one of the hardest hit state economies by the foreclosure crisis.  Yesterday, the Mortgage Asset Research Institute released a report showing that Rhode Island had the highest rate of mortgage fraud in the country.

The report, prepared for the Mortgage Bankers Association, compared the number of fraud cases reported in an industry data base with the total number of mortgage loans originated last year. A state whose fraud rate matched the national average would receive a score of 100, while higher scores indicated higher-than-average fraud rates.

Rhode Island’s score, 315, means that it had more than three times its share of mortgage fraud cases as it should have for the number of loans originated here. Florida dropped to second, with a score of 279.

The report also detailed the various kinds of fraud:

The research institute rated states on seven types of fraud in the mortgage process: application, tax return/financial statements, appraisal/valuation, verification of deposit, verification of employment, escrow/closing documents and credit report.

The biggest source of cases in Rhode Island was appraisal/valuation fraud, which accounted for 38 percent of the cases. That was followed by application fraud, 31 percent, and tax return/financial statement fraud, 23 percent.

And Rhode Island’s position at #1 was a byproduct of growing fraud:

Since 2004, Rhode Island has been steadily on the rise. In that year, it ranked 41st, with a score of 16, meaning it had only about one-sixth its share of mortgage fraud cases. In 2005 and 2006, Rhode Island ranked 18th. And in 2007 it climbed to 5th.

Click here for further resources on how you can combat mortgage fraud.

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4 responses to “RI: Highest Rate of Mortgage Fraud

  1. I wonder if this has any correlation with all the illegals the Democrats let in this state.. Thanks Piava Weed.

  2. Dear Frank –

    According to the study, “Rhode Island reported no cases of fraud based on fraud in verification of employment. ”

    This seems to indicate that there is little correlation between the immigration status of would-be homeowners and mortgage companies.

    And, regarding your contention that “Democrats let in illegals,” I would be remiss not to point out that immigration patterns in Rhode Island and in other states (and nations) follow economic opportunity.

    -Matt

  3. Matt,

    Well, how about “application fraud, 31 percent, and tax return/financial statement fraud, 23 percent.?”

    Applying with a fake SS cards and falsifying incomes has a direct correlation to application fraud.

    Immigration patterns follow economic opportunity – ok, loosely.

    However, the RI Democrats have made laws, or turned a blind eye on the immigration laws in RI – Hence RI being a haven for them. There’s plenty of economic opportunity in NH, but you dont see them moving there…

    Just look at Women and Infants Hospital..

    You’d be lying to yourself and the taxpayers if you feel RI Gov’t is doing a great job on this front…

  4. Frank –

    I believe application fraud and tax return/financial statement fraud both relate to the borrower misstating their income. This would be the case for many of Rhode Island’s borrowers who filed a “stated income.”

    If you disagree, you can contact the Mortgage Asset Research Institute and ask them if their survey included the use of fake SS#.

    It should also be noted that, “The biggest source of cases in Rhode Island was appraisal/valuation fraud, which accounted for 38 percent of the cases.”

    I think you would agree with me that appraisal/valuation fraud has nothing to do with the immigration status of the borrower.

    -Matt

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