The risk of “outright identity fraud” took a sharp spike in the second quarter of this year, according to the latest Mortgage Fraud Risk Report from Interthinx, a national risk mitigation company focusing on mortgage fraud and regulatory compliance.
While Notaries generally are not in a position to detect most types of mortgage scams, they can combat mortgage- and real estate-related identity fraud by properly identifying signers.
The overall risk of fraud in mortgage transactions remained unchanged from the previous quarter, and showed a four-percent decline from the second quarter of 2013, but the threat of various types of identity fraud rose nine percent from the first three months of 2014.
California takes the top spot as the state with the most overall fraud risk, followed by New Jersey, Florida, Arkansas and Delaware. However, Arkansas is the state with the highest risk of identity fraud in the mortgage application process.
Interthinx analyzes large samples of mortgage applications for signs of various types of impropriety in the lending process, including appraisals, income and employment claims and identity.
Between the third quarter of 2013 and the first quarter of this year, the threat of identity fraud declined by roughly 30 percent. So the latest report represents a sharp reversal of that trend.
“Identity fraud is often used in mortgage fraud schemes in order to hide the identity of the perpetrators,” the report noted. Scammers often use stolen identities and Social Security numbers to obtain loans and property illegally.
Interthinx officials have consistently stressed the important role Notaries play in preventing identity fraud.
Recent research also has indicated that properly matching a signer to their ID can be challenging in today’s environment.
The NNA offers a number of resources for Notaries who want to brush up on the proper way to identify signers and prevent fraud, including free online webinars and best practice articles in the Notary Bulletin.
Michael Lewis is Managing Editor of member publications for the National Notary Association.
Related Articles:
Risk Of Identity Scams In Mortgage Fraud Declining
The Notary Challenge: Matching Faces To ID Harder Than You Think
What If The Name On An ID Doesn’t Match The Name On The Document?
Additional Resources:
How to Detect and Prevent Real Property Fraud
How to Detect and Defeat Fraud: The Secrets of Proper Identification