Mortgage Fraud Risk Index Jumps 11 Percent

— Interthinx also reports property valuation fraud up 46 percent from a year ago —

AGOURA HILLS, CA, October 27, 2009 Interthinx released its quarterly Mortgage Fraud Risk Report today, covering data collected during the third quarter of 2009. The report, which includes an analysis of the state of mortgage fraud nationally and indices for the four most common types of mortgage fraud, indicates that the overall Interthinx Mortgage Fraud Risk Index surged more than 11 percent from the previous quarter to 145 (n = 100). Interthinx is a leading provider of proven risk mitigation, mortgage fraud prevention, and regulatory compliance tools for the mortgage industry.

The report covers the third quarter of 2009. Major findings include the following:

  • The Property Valuation Fraud Risk Index is up 25 percent from the last quarter and up 46 percent from the same period a year ago. That shows the continued shift to schemes involving short sales, REO (Real Estate Owned) inventories, and refinancing by borrowers whose equity has been impaired by falling real estate values.
  • Despite relatively small variations on the national scale, the Index range from the lowest to the highest risk state has widened considerably, from 100 to 215. Thus, the riskiest states are now much more risky than a year ago, and the least risky states are much less risky than a year ago.
  • The states with the highest overall levels of mortgage fraud risk correspond closely to the states with the highest levels of foreclosure activity, consistent with the observed increase in foreclosure-related fraud schemes. Fraud risk remains a leading indicator of foreclosure risk.

The Interthinx Mortgage Fraud Risk Report was created by the new Interthinx analytics team, composed of seven experienced professionals, four of whom hold Ph.D.s. Interthinx established the new unit to provide deeper insight into the extensive pool of data the company amasses from the industry’s use of its FraudGUARD® loan-level fraud detection tool.

Interthinx analysts expect fraud indices will continue to rise over the next three years as a large number of adjustable rate mortgage loans — especially option Adjustable Rate Mortgages (ARMs with negative amortization features) — reset between now and the first quarter of 2012.

“The report provides data that lenders can use to anticipate and prepare for trends that will impact their risk mitigation strategies and can ultimately make them more successful at identifying fraud before loans are funded,” said Kevin Coop, president of Interthinx. “Unfortunately, the data do not currently support a positive trend relative to fraud risk. The industry must be vigilant if it hopes to guard against fraud, especially in the area of valuation fraud in the current market.”

“Before this report was available, the industry had no easy way to tell precisely where mortgage fraud was increasing at the greatest rate,” added Mike Zwerner, senior vice president of business development for Interthinx. “The report provides a granular level of detail that provides actionable information to risk managers.”

 For more information about the report, visit http://www.Interthinx.com.

About Interthinx
Interthinx, Inc., a Verisk Analytics subsidiary, is a leading national provider of proven risk mitigation and regulatory compliance tools for the financial services industry. At every point in the mortgage life cycle, Interthinx helps to assess risk and prevent mortgage fraud and compliance violations. More than 1,100 customers — including 15 of the top 20 mortgage lenders and three of the top five largest financial institutions — employ the company’s products and services. Interthinx earned Mortgage Technology magazine’s prestigious 10X Award as “a diagnostic and corrective solution of the highest order,” for its technological expertise in predictive analytics, data mining, and risk scoring. The Interthinx suite of solutions sets the standard for the industry and directly increases the value of client portfolios. For more information, visit www.interthinx.com or call 1-800-333-4510.

About Verisk Analytics
Verisk Analytics is a leading provider of risk assessment solutions to professionals in insurance, healthcare, mortgage lending, government, risk management, and human resources. Verisk Analytics includes the holdings of Insurance Services Office, Inc. (ISO) and its subsidiaries, which provide essential solutions to the insurance, mortgage lending, and healthcare markets.

Release: Immediate

Contact:
Rick Grant
Telephone: 800-979-9049
Cell: 570-497-1026
Email: rick@rickgrant.net