Projo 7 to 7 News Blog

Rhode Island has displaced Florida as the state leading the nation in mortgage fraud, according to a report made public this afternoon by the Mortgage Asset Research Institute.

The report, prepared for the Mortgage Bankers Association, compared the number of fraud cases reported in an industry data base to the total number of mortgage loans originated last year.

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.

A. Michael Marques, director of Rhode Island's Department of Business Regulation, which handles complaints about mortgage fraud, viewed the report skeptically.

"I believe that there's less fraud and more reports of fraud," Marques said this afternoon. "It may be a statistical anomaly because the volume is off."

He said the number of mortgages originating in Rhode Island dropped dramatically last year as credit tightened nationwide. Also, borrowers found Rhode Island lenders scrutinizing applications more closely than ever. "They're checking everything that you give them."

That is precisely the climate in which fewer people would try to commit fraud and more people would get caught, he said.

Marques noted that, through the first nine months of 2008, Rhode Island was not even on the list of the top mortgage-fraud states tracked by the research institute. Then, in the last three months of the year, the state vaulted to the top.

The report's authors themselves noted the meteoric rise. "Future reports will tell if this is a statistical anomaly," the report says. "However, current data suggests that the state has emerged with a problematic and heretofore unnoticed mortgage fraud problem."

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 fifth.

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.

Rhode Island reported no cases of fraud based on fraud in verification of employment.

Your Turn: Why does Rhode Island have such a high rate of mortgage fraud?

Extra: Read the special report: Borrowing Trouble

A previous post was first published at 2 p.m.

 Tags  mortgage

Comments

were #1 said:

lets blame the unions for this too.hahahahaha

Link | March 16, 2009 2:09 PM
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Dave, Middletown, RI said:

LOL, I can't stop laughing (and then crying) at all the horrible statistics that Rhode Island leads in. It seems like this state is home-sweet-home for every greedy crook and corrupt politician in the entire country.

Link | March 16, 2009 4:51 PM
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me said:

Alrighty then...where are the arrests and indictments?

Link | March 16, 2009 4:57 PM
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Yacko said:

"The biggest source of cases in Rhode Island was appraisal/valuation fraud"

And how much of this was out-and-out fraud or more likely an honest attempt to give a valuation but prices continue to drop like a stone making the appraisal out of whack days and weeks later when the loan is processed? I guess an appraiser could say $0 and not be hassled. Maybe all our property should be worth $0 and we all could be safe from the fraud of claiming it is worth anything.

Link | March 17, 2009 6:08 AM
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jimscotland53 said:

and just what else would the average taxpaying rhode islander expect out of our current administrations business expertise. Probably most of those regulatory positions have gone unfilled and the remaining people forced to retire.

Link | March 17, 2009 7:02 AM
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