Florida tops the list of overall mortgage fraud cases and the list of subprime originations mortgage fraud cases for 2006 according to a Mortgage Asset Research Institute (MARI) report (PDF) released recently. California, Michigan, Georgia, and Utah round out the top five of the overall MARI fraud index listing. The subprime originations MARI fraud index list includes Utah, Michigan, Minnesota, and Georgia in the top five. Florida replaces Georgia in the top spot on both lists for 2006, and, although the Peach State ranked fourth on both lists, it had the best rebound from 2005.

Mortgage fraud, according to John Mechem, public affairs manager of the Mortgage Bankers Association (MBA), can be as simple as borrower deception and as detailed as an elaborate swindle.

"Fraud against lenders is a material misrepresentation by a borrower that entices a lender to give a loan that would not otherwise had been given had they known all the facts when making that loan decision," Mechem told BUILDER Online. "Basic examples run the gamut of simply lying about your income to really sophisticated schemes that involve inside players such as appraisers over-appraising a property, stripping all the equity out after the loan is closed, and then the borrower walks away."

According to data from the FBI and the Financial Crime Enforcement Network (FinCEN), suspicious activity reports related to mortgage fraud have risen from 3,515 in 2000 to 28,000 in 2006. Estimated losses over that time frame come to about one billion dollars.

"Fraud against mortgage lenders is a growing concern to all who have a stake in our industry," said John M. Robbins, chairman of the MBA, in a released statement. "While we continue to try to get our arms around the full scope of the problem, the MARI report significantly helps the industry better understand where we need to focus efforts in defending our companies and communities against mortgage fraud as it increases in frequency across the nation."

Learn more about markets featured in this article: Atlanta, GA.