Is Mortgage Fraud on the rise even with the new Fannie Mae requirements for QC?

While commercial loan origination and median home prices have been trending downwards, mortgage and property fraud rates have been steadily increasing, up 75% from pre-recession peaks. According to the CoreLogic Fraud Index, $12 billion worth of originated loans were found to be fraudulent in 2010, and while the total for this year is expected to be around $7.4 billion, the rate of mortgage fraud remains constant due to the currently contracting revenues of the mortgage business. 

In all, these fraudulent mortgages could carry a price tag of up to $375 million a year for lenders. However, also according to the CoreLogic Fraud Index, mortgage fraud has taken on a new identity, with the traditional identity and employment fraud rates falling a combined 56% from their 2010 levels. 

Current market conditions- distressed and depreciating properties, as well as overwhelmed loan servicers scrambling to mitigate growing losses following the mortgage bubble’s collapse in late 2008- have proven to be strong catalysts for the growth of property, occupancy, and debt fraud in a time when US regulators are watching the mortgage business more closely than ever. 

Further examination of CoreLogic’s data have also show higher fraud rates in the Midwest and Northeast, with Chicago receiving the top national ranking where the risk of mortgage fraud is over 30% of the national average. Furthermore, Suspicious Activity Reports filed by large lenders was 70,472 in 2010, up from 67,507 in 2009. However, it is important to note that while SAR reports are increasing, this increase may show a growing trend of due diligence and stricter compliance with mortgage laws following the housing bubble’s collapse in late 2008.

Stats cited from http://mortgagedaily.com

What Does 25 Percent PMI Coverage Actually Mean

Question?   What does 25 percent PMI coverage actually mean
Answer:  25 percent coverage actually means that the MI company will pay out 25 percent of the loan amount and total expenses to the lender when a property goes into foreclosure (the file is of course scrubbed for fraud first)
The average MI paid claim is 51,000 dollars.

The government is looking to get rid of Fannie Mae and Freddie Mac. What? And go back to real common sense underwriting????

Fannie Mae and Freddie Mac are publicly traded companies.

Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corp.) were taken over by the government in 2008 after billions of dollars in losses and years of mismanagement.

Fannie was created as a federal agency in 1938 and chartered by Congress in 1968, followed by Freddie in 1970, to increase access to home loans. But they also are publicly traded corporations and -- before their taxpayer bail out -- had a duty to maximize shareholder return.

Those two, divergent missions were criticized as a "fundamentally flawed" business model by the Financial Crisis Inquiry Commission, which was created by Congress to examine the causes of the economic crisis that began in 2007.

Fannie and Freddie loosened underwriting standards leading up to the financial crisis, buying and guaranteeing riskier loans and ramping up purchases of mortgage-backed securities to please Wall Street analysts and "ensure generous compensation for their executives and employees," the commission determined.

With the housing market in turmoil in 2007 and 2008, Fannie and Freddie reported billions of dollars in losses. They were placed in conservatorship under the Federal Housing Finance Agency in September 2008. Since then, the Treasury Department has provided $169 billion to cover their losses (with re payments the net cost to taxpayers is $141 billion). The total could rise to $363 billion, the FHFA said. Other estimates put the total closer to $390 billion.

Still, senior executives at the mortgage giants continue to receive multimillion-dollar salaries. The top six executives received a combined $35 million in compensation over 2009 and 2010.

They are paid as if they are risk takers when really the government is taking the risk!

Fannie and Freddie's future is uncertain right now.

The Obama administration and Republicans in Congress agree that Fannie and Freddie should be. In housing. abolished. In February, President Barack Obama proposed gradually phasing them.