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Property Valuation Fraud Risk Rises Nearly 8 Percent

Interthinx has released its quarterly Mortgage Fraud Risk Report covering data collected in the fourth quarter of 2011. According to the most recent analysis, certain regions of the New York Tri-State area have moved into the “very high risk” category, due primarily to the increase in property valuation fraud risk. For the purposes of this report, the New York Tri-State area is defined as the New York City metro along with the Connecticut metros of Bridgeport and New Haven and the New Jersey metros of Atlantic City and Ocean City.

Across the United States, the Property Valuation Fraud Risk Index increased nearly 8 percent in the fourth quarter of 2011 over the previous quarter. The rise follows a period of decline and stability in valuation-related fraud.

Other results uncovered in the most recent Interthinx Mortgage Fraud Risk Report include:
  • The national Mortgage Fraud Risk Index was up 1.4 percent over the last quarter and 3.6 percent from a year ago to 145 (n=100). Overall, the index has remained at the upper end of the narrow band (140-145) over the last seven quarters.
  • Although Income/Employment Fraud Risk is only up 1 percent since the third quarter of 2011, the index has jumped nearly 14 percent since a year ago and 46 percent over two years ago, putting lenders at high risk for this type of fraud.
  • With an index value of 247, Arizona overtook Nevada (with an index value of 242) as the nation’s “Riskiest State.” Nevada had held the top spot since the first quarter of 2010. Florida is the third riskiest state for mortgage fraud and is home to ZIP code 33993, currently the riskiest ZIP code in the nation.

The full report is available at http://www.interthinx.com/pdf/11_Q4MFRR_020112_FNL.pdf .

“Valuation fraud continues to be a problem for lenders intent on mitigating overall fraud risk,” said Mark Chapin, chief valuation officer for Interthinx. “Lenders must take great care with their collateral valuation process in this environment, as many areas around the country are still experiencing home value declines. Technology — linked with the honed skills of qualified appraisers — produces the most credible results in our constantly moving marketplace.”

This edition of the report adds sparklines to all of the top ten Metropolitan Statistical Area (MSA) tables. These mini-graphs display the Fraud Risk Index values for a particular MSA over the previous eight quarters. Using the sparklines — in conjunction with the index values and quarter-on-quarter or year-on-year percentage changes — provides greater detail on both the trend and magnitude of the variations in fraud risk.

The Mortgage Fraud Risk Report is an Interthinx information product created by an internal team of fraud experts. This is the eleventh time Interthinx has released its quarterly report. The report provides deeper insight into current fraud trends through the analysis of more than 12 million loan applications amassed from the industry’s use of the Interthinx FraudGUARD loan-level fraud detection tool.

For more information about Interthinx and its Mortgage Fraud Risk Report, visit http://www.Interthinx.com .

About Interthinx 

Interthinx, a Verisk Analytics (Nasdaq:VRSK) subsidiary, is a leading national provider of comprehensive risk mitigation solutions focusing on mortgage fraud, collateral risk and valuation, regulatory compliance, forensic loan audit services, loss mitigation, and loss forecasting. With more than 20 years of experience in customizable risk evaluation technology, Interthinx offers proven and effective predictive analytics to the residential mortgage industry through its experience with millions of loan applications and fraud incident data from thousands of monthly loan reviews. Throughout the mortgage life cycle, the Interthinx suite of services can increase the value of client portfolios with its comprehensive and holistic approach to loan quality and compliance. Winner of multiple awards for technology, Interthinx helps clients reduce risk, increase operational efficiencies, satisfy regulator demands, manage data verification, remain compliant, and mitigate loan buybacks. The Interthinx quarterly Mortgage Fraud Risk Report is a standard for the financial services industry. For more information, visit www.interthinx.com or call 1-800-333-4510. 

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