Media Release: Potential fraud rises in mortgage applications at same time CFPB issues more stringent rules for lender scrutiny

Significant increases in diverse metropolitan statistical areas point to need for continued vigilance

LOVELAND, Colo., January 24, 2013 – Kroll Factual Data, Inc. (“Kroll Factual Data”), a leading provider of risk mitigation and verification services to mortgage lenders, banks and credit unions, announced today a 1.1 percent average increase throughout the country of possible fraudulent activity associated with the loan applications processed by the company between the second and third quarters of 2012. In certain metropolitan statistical areas (MSAs) of the country, the increase from the second to third quarter was even more pronounced, rising by more than 50 percent. In the meantime, the federal Consumer Financial Protection Bureau issued new regulations on Jan. 17, 2013, that among other things require lenders to verify borrowers’ financial records and thus ability to repay mortgages.

“While fraud alerts declined in some MSAs,” said Rod Bazzani, President, Kroll Factual Data, “these declines were offset by significant increases in others. This spike in potential fraud is troubling, coming at the same time the mortgage industry is beginning to turn the corner. More importantly, the fact that red flags are rising in every area of the country highlights the continued need for lenders to remain vigilant against fraud. In addition, the new CFPB restrictions—whose ultimate goal is to ensure a borrower can repay a mortgage over its entire term—raise the stakes for lenders to catch fraud or inadvertent errors that might compromise lending decisions or risk buy-back requests.”

Kroll Factual Data examined MSAs with at least 1,000 applications per quarter, and using its proprietary risk analysis and verification engines, isolated certain files that may contain indicators of potential mortgage origination fraud. For example, Flint, Mich., posted the largest quarter-over-quarter increase of potential fraud found within submitted loan applications, with a 50.32 percent increase over last quarter. 

The following MSAs comprised the top 10 for increases in potential fraud (Q3 compared with Q2):


Flint, Mich.



Columbia, Mo.



Lancaster, Pa.



Tacoma, Wash.



Santa Fe, N.M.



Des Moines, Iowa



Omaha, Neb.-Iowa



Fort Worth, Texas



Providence-Fall River-Warwick, R.I.-Mass.



Appleton-Oshkosh-Neenah, Wis.



To help lenders combat fraud, Kroll Factual Data offers comprehensive information and analytical tools that address major components of the lending decision-making cycle: credit and capacity; identity and investigation; collateral and property; and business and professional verifications. In addition, the company is a leader in risk assessment, government compliance and transactional transparency.

Despite the general upward trend of mortgage-related fraud, there were bright spots in Kroll Factual Data’s findings. The MSAs with the largest decreases in potential fraud were Champaign-Urbana, Ill.
(-19.55%); Bridgeport-Milford, Conn. (-18.59%); and San Francisco-Oakland, Calif. (-18.37%).

The following MSAs comprised the top 10 for decreases in potential fraud (Q3 compared with Q2):


Champaign-Urbana, Ill.



Bridgeport-Milford, Conn.



San Francisco-Oakland, Calif.



Birmingham, Ala.



Cleveland, Ohio



Odessa-Midland, Texas



Jacksonville, Fla.



Kansas City, Mo.-Kan.



Norfolk-Virginia Beach-Newport News, Va.-N.C.



Stamford, Conn.


 About Kroll Factual Data

Kroll Factual Data, Inc. is a provider of independent verification services to mortgage lenders and investors, banks, credit unions, insurers, property management firms, regulatory and government agencies and other businesses. For more than 25 years, Kroll Factual Data has helped clients confidently make timely, accurate decisions that mitigate risk, enhance safety and soundness, and increase profitability. By aggregating and analyzing information, Kroll Factual Data helps its customers protect financial assets and comply with regulations. For more information, visit


Media Contact: Chris Horn (800) 929-3400 x7017 or

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