An updated CoreLogic 2010 Mortgage Fraud Trends Report finds that while overall mortgage fraud has increased by 20% compared to its lowest level in 2009, refinance fraud increased by 30%.

And according to CoreLogic, recent government loan programs were among the main factors that had a considerable impact on fraud because “many of them lacked necessary fraud controls.”

Consequently most of the fraud increase was attributed to Federal Housing Administration loans, Home Affordable Refinance Program or HARP loans, real estate-owned or foreclosure, and short sales.

Findings based on the CoreLogic database that covers 97% of the nation’s real estate transactions deriving from 80 million loans that represent 65% of the origination market also show the last seven quarters of purchase-related fraud risk “has remained stable” during that same time period.

CoreLogic also reported that currently the “growing area of suspicious activity” has been in REO sales, which “represent a larger risk to the mortgage industry than short sales.”

Earlier this year CoreLogic estimated that lenders were “incurring unnecessary losses of $310 million per year in short sale transactions.” It resulted from an all-time high volume of short sales on single-family residences that in the second quarter of this year reached nearly 60,000, a trend “clearly steep with the numbers, more than tripling in two years.”

CoreLogic’s projections of annual totals for all short sales — including single family, condominiums and other types of properties — are at 400,000, an outlook that is promising given that by consensus short sales are considered the best way to minimize overall losses.

Meanwhile REO-related losses represent a significant risk.

By November 2010 one in every 24 REO sale transactions, or 4.2%, were part of an “egregious resale and therefore deemed risky.” It is way higher than the 1% fraud risk that is considered the acceptable fraud rate.

Another emerging trend according to CoreLogic analysts is the fact that more investment companies are getting involved in fraud as “a disproportionately higher percentage of suspicious resales” are conducted by these entities.

Others include the changes in the fraud type distribution.

It includes decreases in income fraud, mostly due to more careful verifications and the use of sophisticated technology. At the same time undisclosed debt and employment fraud are now “the fastest growing segments.”

Data show that while income represents 23% of all fraud, it dropped by 8%. At the same time while employment and undisclosed debt stand at 13%, it increased by 5% and 9%, respectively.

It indicates that is the type of fraud risk lenders and servicers will have to closely monitor going forward.

To make that endeavor possible, CoreLogic said it has added a neighborhood level fraud risk measure to its fraud metrics in addition to its national, state, MSA and ZIP code level segments.

Following the “robo-signing” scandal and calls to ensure mortgage data accuracy and transparent chain of property title information various technology providers are offering loan level review options.

Mark Parsells, executive chairman of Global Debt Registry, Wilmington, Del., said all parties including issuers, servicers, debt buyers, sellers, regulators, judges and consumers are interested in single-source technology options that can offer “clean account-level chain of title, validated account-level data, and a secure repository for management of all account-level documentation.”

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