Employment/Income Fraud Risk Spikes Dangerously

January 1, 2011 / 3 min read

Interthinx reports a serious increase in misrepresented borrower data

AGOURA HILLS, CA — November 17, 2011 — Interthinx has released its quarterly Mortgage Fraud Risk Report covering data collected in the third quarter of 2011. According to the most recent analysis, employment and income fraud risk is on the rise, up 8.8 percent from third-quarter 2010 and up 50 percent from third-quarter 2009. Company analysts believe the increase is due to borrower data being misrepresented in order to meet debt-to-income thresholds required by lenders in the face of stagnant or declining real incomes.

Other results uncovered in the most recent report include:

For the sixth consecutive quarter, the two riskiest states are unchanged: Nevada has the highest fraud risk, with an index value of 255; Arizona is next, with an index value of 243.
California was the third riskiest state overall, with an index value of 197. It was particularly well represented in all the indices, containing half of the ten riskiest metropolitan statistical areas (MSA), seven of the top ten ZIP codes, and more than half of the top ten MSAs in the property valuation and employment/income indices.
Non-geographic risk profiling suggests that fraud risk is greatest in loans with high loan-to-income ratios (the ratio of loan amount to monthly income). In general, all the fraud risk indices increase as the loan-to-income ratio increases, so almost universally, the highest indices occur at loan-to-income values close to or greater than 100.

“We’ve been carefully monitoring the increase in the employment and income fraud risk index for the last two years,” said Mike Zwerner, senior vice president for Interthinx. “This actionable risk intelligence led us to develop the integration of The Work Number® from Equifax within FraudGUARD® to provide lenders with an efficient and effective way to confirm a borrower’s ability to repay. At Interthinx, we rely heavily on trending from our Mortgage Fraud Risk Report to lead technology and product innovation.”

The Mortgage Fraud Risk Report is an Interthinx information product created by an internal team of fraud experts. This is the tenth time Interthinx has released its quarterly report, which is providing deeper insight into current fraud trends through analysis of the more than 12 million loan applications amassed from the industry’s use of the Interthinx FraudGUARD loan-level fraud detection tool.

For more information about Interthinx and its Mortgage Fraud Risk Report, visit www.Interthinx.com.

About Interthinx
Interthinx, a Verisk Analytics (Nasdaq:VRSK) subsidiary, is a leading national provider of comprehensive risk mitigation solutions focusing on mortgage fraud, collateral risk and valuation, regulatory compliance, forensic loan audit services, loss mitigation, and loss forecasting. With more than 20 years of experience in customizable risk evaluation technology, Interthinx offers proven and effective predictive analytics to the residential mortgage industry through its experience with millions of loan applications and fraud incident data from thousands of monthly loan reviews. Throughout the mortgage life cycle, the Interthinx suite of services can increase the value of client portfolios with its comprehensive and holistic approach to loan quality and compliance. Winner of multiple awards for technology, Interthinx helps clients reduce risk, increase operational efficiencies, satisfy regulator demands, manage data verification, remain compliant, and mitigate loan buybacks. The Interthinx quarterly Mortgage Fraud Risk Report is a standard for the financial services industry. For more information, visit www.interthinx.com or call 1-800-333-4510.

Release: Immediate

Contact:
Rick Grant
Telephone: 800-979-9049
Cell: 570-497-1026
rick.grant@rga-pr.com