According to a study by the LexisNexis® Mortgage Asset Research Institute, reported mortgage fraud and misrepresentation increased 7 percent from 2008 to 2009.
The study states that the reasons for the increase include “new opportunities to take advantage of consumers, maintenance of lifestyles obtained during the boom period, consumers who are desperate for the American dream of home ownership, and the need for new, creative methods of moving illicit funds.” It also states that the fraud is being facilitated by technology which provides “fraudsters with the ability to access information, conduct criminal activities and remain anonymous via the internet, and manipulate processes that rely on the need for expediency.”
The report also included information regarding the role of appraisers in fraud and misrepresentation. It concludes that “[t]he most prevalent types of appraisal fraud and misrepresentation for loans originated in 2009 involve incorrect comparables, omitted information, and value inflation. Thirty-six percent of loans with reported appraisal fraud and/or misrepresentation have misused comparables. Thirty-three percent involve a material omission of relevant information that would have affected the value. Value inflation . . . is also a large portion of reported appraisal fraud and misrepresentation.”