Reported incidents of mortgage fraud and misrepresentation by professionals in the mortgage industry continue to climb, increasing by 7 percent from 2008 to 2009, according to a new report from the Mortgage Asset Research Institute.

While the pace has slowed since the 2007-2008 increase of 26 percent, the continued increase is believed to be attributed to better industry reporting and policing.

MARI's fraud index, or *MFI, is based on the number of fraud and misrepresentation incidents reported for each state and is not based on mortgage dollar amounts.

The MFI is calculated by dividing a state's actual percentage of national mortgage fraud reports by that state's expected fraud (based on total loan originations). For example, a state with 5 percent of the nation's loan originations would be expected to have 5 percent of reported fraud incidents. If that state had 10 percent of reported fraud incidents, however, that state would have an MFI of 200, or twice its expected mortgage fraud rate.

Click ahead to see MARI's top 10 states for mortgage fraud in 2009.


By Constance Parten
Posted April 26, 2010

Complete report and methodology

MFI: 103

This is Virginia's first time in the top 10. The state was ranked at No. 24 in 2008 with an MFI of just 46.

The Washington, DC, Maryland, Virginia area accounted for 4 percent of the country's mortgage fraud reports received.

MFI: 107

Illinois' MFI decreased from 161 in 2008 when the state was ranked at No. 6 on the list.

The Chicago-Gary, Indiana-Kenosha, Wis., region accounted for 5 percent of the country's mortgage fraud reports.

MFI: 124

Georgia was also ranked No. 8 in 2008, with an MFI of 156. It is one of eight states in the eastern half of the country to make the top 10 in 2009.

MFI: 135

This is the first time that New Jersey has made the top 10 list. It was ranked at No. 11 in 2008 with an MFI of 102.

MFI: 136

Maryland was ranked No. 5 on the list in 2008 with an MFI of 182.

MFI: 136

Michigan moved down from No. 4 in 2008 but is among the states with the highest concentration of appraisal fraud and misrepresentation along with Ohio and Illinios.

MFI:158

Arizona moved into the top five for the first time in 2009. It was ranked at No. 10 in 2008 with an MFI of 107.

MFI: 159

California was ranked No. 7 in 2008 with an MFI of 158.

The Los Angeles-Riverside-Orange County accounted for 8 percent of the country's mortgage fraud reports received in 2009.

MFI: 217

New York was ranked at No. 3 in 2008 with an MFI of 191.

The greater New York area, including Northern New Jersey and Long Island, accounted for the highest concentration of mortgage fraud reports in the country in 2009 at 12 percent of all reports received.

MFI: 292

Ranked No. 1 in 2006 and 2007, Florida moved back into first place in 2009 with close to three times the expected amount of reported mortgage fraud and misrepresentation for its origination volume.

According to a supplement to the MARI report, Florida also has the five projected weakest real estate markets in the country, including Port St. Lucie/Fort Pierce, Orlando/Kissimmee, Naples/Marco Island, Palm Bay/Melbourne/ Titusville, and Deltona/Daytona Beach/Ormond Beach.

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