as Fraudsters Become More Sophisticated in How They Fudge Their Income
The National Mortgage Application Fraud Risk Index maintained by CoreLogic found a six percent increase in mortgage fraud risk in the first three months of 2019 relative to the first quarter of 2018. Applicants lying about their income have been increasingly more difficult to detect in recent years, employing tactics such as lying about employment and promotions while providing false documentation to corroborate employment claims, as well as counterfeit college transcripts and divorce decrees.
Fraudulent applicants are taking advantage of the time it takes for new employment records and information to reach traditional credit and employment data vendors. Since 2016, CoreLogic has seen consistent increases in the number of applicants or borrowers claiming a new job or promotion that occurred within the past year. The contemporaneousness of the new job or promotion (that did not actually occur) means that tax returns cannot be used to validate the self-stated increase in income.
This forces those screening mortgage applications to rely more on the employment verification information supplied by the applicant, or technology like Confidence Indicator Services that can help identify applicants that may be deceitful. CoreLogic has also reported an uptick in fabricated Verification of Employment (VOE) letters, while dishonest applicants are able to find information they need to deceive lenders from a company’s website.
The National Mortgage Application Fraud Index considers all mortgage applications screened by CoreLogic and the 100 regions, or Core Based Statistical Areas (CBSAs), with the highest fraud risks are ranked. Eight of the fifteen CBSAs with the highest fraud risk are in Florida, including three of the top five. Two of the top 15 CBSAs most rampant with mortgage fraud are in New England and another two are in California.
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