Be warned: Mortgage fraud — big and little — is rising

Fraud in connection with home mortgages is increasing, and it ranges from little white lies about the intended use of the property all the way up to sophisticated schemes.

Overall fraud risk in the home mortgage field is up 16.9 percent in the past 12 months, according to data analytics firm CoreLogic.

Of all types of application fraud, “occupancy” misinformation — when “applicants deliberately misrepresent their intended use” of the property — is rising the fastest. That happens when applicants promise lenders they will live in a property, qualifying for lower interest rates and down payments, but they really plan to rent out the property.

Application fraud was found in 1 of every 122 mortgage applications during the first two quarters of 2017, said Bridget Berg, a senior director at CoreLogic. During the same period in 2016, 1 in 143 loan applications had signs of fraud.

Other types of fraud found by CoreLogic included misrepresentation of employment, income and the source of down-payment money.

Other companies that monitor mortgage fraud confirm that fraud has increased and could be headed in worrisome directions. Mark Fleming, chief economist for First American Financial Corp., said the recent hack at credit bureau Equifax, where files on 145.5 million consumers were accessed, could open the door to farmore-sinister forms of application fraud.

That risk may be increased further by the many Americans who have been slow to protect themselves. According to an estimate by one expert, Avivah Litan of Gartner Research, only about 2 to 3 percent of consumers now have freezes on their credit files, and only around 5 percent may start freezes as a result of the Equifax heist.

What does this all mean for you? At the very least, be aware that any form of mortgage fraud — including falsehoods about intended occupancy — may constitute bank fraud, a federal crime. And defend against identity thieves: Freeze your credit reports.