Losses from mortgage fraud in U.S. to reach $2.5 billion
Falling home prices and inappropriate mortgage underwriting have grabbed the headlines and much of the blame for mortgage credit woes in recent months. But the significant rise in mortgage fraud over the past 10 years is another important trend. New research from TowerGroup predicts that losses from mortgage fraud will reach $2.5 billion (USD) in 2008 and that comparable losses will continue for several years thereafter.
TowerGroup anticipates that lenders will respond by deploying technology tools to assist in the detection and prevention of mortgage fraud and that their annual spending on such tools will reach several hundreds of millions of dollars in the next few years.
Mortgage fraud is difficult to track and takes many forms — for example, fraudsters cheating borrowers out of their properties with false promises of foreclosure avoidance or using the identity of a real person (often without his or her knowledge) to fraudulently purchase one or more properties. TowerGroup has developed a graphic that helps categorize the different motives and methods of mortgage fraud, as shown here: — www.theasianbanker.com (March 28 2008)–