Mortgage Fraud in Atlanta – Alive and Very Well

Mortgage fraud in Atlanta is alive and quite well. Despite all of the meddling from Washington and their involvement in the real estate business, fraud continues.  CoreLogic completed an in depth 2010 study that was very interesting and is worth the short read. Although a few months old, it’s amazing (in a bad way) to see how these pieces of human debris twist and turn to cheat the system. Unfortunately for us, Atlanta is a major hot spot for mortgage fraud. Noteworthy points from the study:

• While a significant problem, mortgage fraud is down 25% from the high point in 3rd qtr of 2007. This is attributable to increased loan application scrutiny and aggressive research of applicants. Applied for a mortgage lately?
• The states with the highest risk for fraudulent loans and subsequent default are CA, FL, GA, NC and SC
• The zip codes with the highest risk of foreclosure are in Jamaica, NY, Orlando, FL,  Atlanta, GA and Detroit, MI. fraud levels here are three to four times the national level.
• Five of the ten highest risk streets for fraud are located in Orlando, FL. There are streets where almost every loan appears to contains fraudulent information. Atlanta owns one of the ten streets.

There are a few surprising areas on the map, to me the coastline of the Carolinas was unexpected. Presumably the south Atlanta Coast and the Gulf represent vacation property mortgage fraud. You can see additional national maps in the complete report.

Top Zip Codes for Mortgage Fraud

As mentioned above, Atlanta is firmly ensconced at the 4th highest “zip 3″ position with a 332 % higher rate of mortgage fraud than the national average.

Another surprising chart from the CoreLogic report was a break out of the different types of mortgage fraud. The obvious first thought is misrepresenting income, and that’s the most frequently reported reason. There is likely some hangover from the NINJA loans – no income, no job, no assets….

Types of Mortgage Fraud

Anyone that’s been in areas of Atlanta has seen the inventory of vacant and bank owned homes. Millions of mortgage dollars are tied up in these essentially worthless shells and ultimately, the cost is passed to the tax payers and future home buyers in the form of higher rates, fees, etc. I’ve been appraising in metro Atlanta since 1994 and more times than I can remember I chirp about the probable fraud I see. Too many times I’m appraising homes at 10%-15% of the mortgage amount; how is that possible? Clearly it’s common knowledge that Atlanta is a mortgage fraud hot spot, where is the FBI?

It’s pretty clear that there will be dishonesty in any business, this one just happens to be the business that I’m intimately involved with. After reviewing the CoreLogic document, while I don’t like the combative nature of the mortgage approval process to some extent it’s understandable.