In MortgageDaily.com’s latest mortgage fraud index, California had the worst state index and the highest dollar amount of fraudulent loans. California also had the most foreclosures during the period. In fact, seven of the 10 states with the highest amount of mortgage fraud were also among the 10 states with the most foreclosures.
California’s FraudBlogger Index was 283 in the second quarter, more than 157 in the first quarter and higher than any other state. The index reflects both the number of active mortgage fraud cases and the estimated dollar volume during a given period.
The dollar volume of cases tracked by MortgageDaily.com in California was $436 million — accounting for nearly one-fifth of total U.S. cases and for more than any other state.
RealtyTrac reported that more California properties faced foreclosure filings during the second quarter than any other state: 192,422.
But coastal markets in the Golden State are showing signs of improvement in market values, according to Veros Vice President of Statistical and Economic Modeling Eric Fox. He said that even the state’s Inland Empire is “showing signs of modest appreciation, joining the state’s strongest metro region, San Diego.”
More than $240 million in fraud cases were tracked in Michigan, the third most of any state. Michigan also had the third-highest level of REO filings during the second quarter and the fifth most foreclosure filings.
The dollar volume of mortgage fraud cases in Arizona was $168 million, ranking it fourth. The Grand Canyon state also ranked fourth in REO filings, with 17,293 repossessions during the second quarter. It ranked third in total foreclosure filings.
With an index of 213, Florida ranked second in the FraudBlogger Index. It also ranked second in foreclosure filings and REO filings. An estimated $147 million in mortgages in the Sunshine State were tied to active mortgage fraud cases during the second quarter.
“Florida has led the list of weak markets for the last several quarters, and is currently in sole possession of the bottom five rankings,” Veros’ Fox said. “Of the ten weakest forecasted markets in the country, seven are in Florida.”
Illinois ranked eighth in mortgage fraud dollar volume, with $96 million. It had the seventh-highest mortgage fraud index, the same ranking the state had for REOs. Illinois had the fourth-highest level of overall foreclosures filings.
Texas was no. 8 on the mortgage fraud index and No. 8 for foreclosures filings. The Lone Star State ranked fifth among its peers for REOs.
Georgia also made the FraudBlogger top-ten and was among the 10 states with the highest foreclosure filings and REOs.
“There is a demonstrable relationship between the incidence of fraud and declining values in markets, the former all too frequently contributing to the latter,” Fox stated. “The increase in mortgage fraud is not news to Veros who has been following these developments for years.”
