Interthinx Q3 2014 Report Shows Higher Levels of Fraud Risk in Markets with High Foreclosures and Distressed Sales

- Overall fraud risk declining at the national level -

February 3, 2015, AGOURA HILLS, CALIF.

Interthinx, Inc., a subsidiary of First American Financial Corporation (NYSE: FAF) and a leading provider of comprehensive risk mitigation solutions for the financial services industry, has released its quarterly interactive Mortgage Fraud Risk Report covering data collected in the third quarter of 2014.

Interthinx Fraud Risk indices are influenced by many factors including house price indices, concentrations of defaulted and foreclosed properties, market demand and supply, employment rates, collusion by parties to loan transactions, regulation and changing consumer patterns. In Q3 2014, the top five states for overall fraud risk have disproportionately higher levels of foreclosures and distressed sales (short and REO) than markets with lower overall risk levels. Although they each have a different mix of fraud risk activity, they all have higher indices for Property Valuation Fraud Risk and Occupancy Fraud Risk than the national values.

Despite the elevated risk in distressed markets, nationally overall fraud risk is declining. In the third quarter of 2014, the national Mortgage Fraud Risk Index value is 98, down two percent from Q2 2014 and down nine percent from Q3 2013.

The national Property Valuation Fraud Risk Index is 122, down five percent from last quarter and up 20 percent from a year ago. Of note, seven of the top ten Metropolitan Statistical Areas (MSAs) for Property Valuation Fraud Risk this quarter are in Florida, including four of the top five spots.  Fort Walton Beach-Crestview-Destin remains the riskiest MSA for Property Valuation Fraud Risk this quarter, with an index of 215, although down 11 percent from a year ago.

Other notable findings in the report include the following: 

  • Fraud risk in Las Vegas – a former perennial in the Mortgage Fraud Risk Index Top 10 – has declined substantially as house price increases and investor acquisition activity have leveled. 
  • The national Occupancy Risk index is 133, up four percent over last quarter and down 10 percent from last year. Although occupancy risk is fairly evenly distributed across the country, Port St. Lucie, Florida moved from number nine last quarter to become the riskiest MSA for Occupancy Fraud this quarter with an index of 142, a 34 percent increase from last quarter, and a 62 percent increase over last year.  Of note, the Memphis MSA, at 198, has the greatest increase both over last quarter and last year at 78 percent and 94 percent respectively.
  • The national Employment/Income Fraud Risk Index is 59, down five percent from last quarter. Nine of the 10 riskiest MSAs for Employment/Income Fraud Risk are located in California, five of which return to the top 10 this quarter: San Jose-Sunnyvale-Santa Clara, San Francisco-Oakland-Fremont, Los Angeles-Long Beach-Santa Ana, Santa Cruz-Watsonville, and San Diego-Carlsbad-San Marcos. The riskiest MSA for Employment/Income Fraud Risk is Fresno, California, with an index of 133. Notably, Boulder, Colorado, at the number two spot, experienced the greatest percentage growth in employment/income fraud at 81 percent.
  • Findings continue to suggest that decreases in housing affordability are a significant factor in employment/income misrepresentation rates.

"Housing price pressure and home affordability can closely correlate with fraud risk," said Jeff Moyer, president of Interthinx.  "Analysis of our indices has shown that higher fraud risk is associated with markets that have lower affordability metrics. When first time or lower income homebuyers face challenges during the qualification of credit, it can open the door to potential risk factors. Conversely, in the most affordable markets -- where median income exceeds monthly housing expense, deposits are stronger, and consumer debts are lower, there is less likelihood to misrepresent income and our indices show comparatively lower fraud risk."

The full report is available at: 

The Mortgage Fraud Risk Report is an Interthinx information offering created by an internal team of fraud experts. This is the twenty-second time Interthinx has released its quarterly report. The report provides deeper insight into current fraud trends through the analysis of millions of loan applications amassed from the industry’s use of the Interthinx FraudGUARD® loan-level fraud detection tool.

The Fraud Risk indices are influenced by many factors including house price indices, concentrations of defaulted and foreclosed properties, market demand and supply, employment rates, collusion by parties to loan transactions, regulation, and changing consumer patterns. By analyzing the data in the Mortgage Fraud Risk Report, it is possible to reach conclusions linked to the overall market experience and gain actionable intelligence to empower risk mitigation in real time.

For more information about Interthinx and its Mortgage Fraud Risk Report, visit

About Interthinx 

Interthinx, Inc., a subsidiary of First American Financial Corporation (NYSE: FAF), provides essential solutions to mitigate risk in the mortgage lending marketplace. Interthinx offers capabilities in mortgage fraud and verification, property valuation, compliance, quality control and loss mitigation that are used by the nation's top financial institutions. Interthinx helps its clients minimize risk, increase operational efficiencies, satisfy regulator demands, manage data verification and remain compliant. For more information, visit or call 1-800-333-4510. 

About First American

First American Financial Corporation (NYSE: FAF) is a leading provider of title insurance, settlement services and risk solutions for real estate transactions that traces its heritage back to 1889. First American also provides title plant management services; title and other real property records and images; valuation products and services; home warranty products; property and casualty insurance; and banking, trust and investment advisory services. With revenues of $5.0 billion in 2013, the company offers its products and services directly and through its agents throughout the United States and abroad.  More information about the company can be found at