Sarasota Metro One of Top Areas in U.S. for Mortgage Fraud Risk (Miami-Fort Lauderdale-Pompano Beach-3rd)

A skyline and bridge at Sarasota, Florida.
Getty/Michael Warren

SARASOTA, Fla. – Sarasota’s housing market is booming. But rising prices and interest rates plus low inventory and lack of affordable options mean that mortgage fraud in the area could increase, according to a national index.

CoreLogic, a financial data and analytics services provider, found that the North Port-Sarasota-Bradenton metropolitan statistical area ranked seventh highest in the nation for mortgage fraud risk in the first quarter of the year.

The fraud risk index for North Port-Sarasota-Bradenton was 167 in the first quarter, up from 159 in the fourth quarter of 2020. Nationally, the mortgage fraud index also increased, from 110 to 122.

The baseline for the CoreLogic index is 100, so the national risk level is considered moderate, said Bridget Berg, principal for industry solutions and property intelligence at CoreLogic.

Of the 15 highest fraud risk metro areas, eight are in Florida. Florida is generally considered a high-risk state because of the large number of second homes and investment properties, Berg said, combined with the state’s long foreclosure process.

“North Port-Sarasota-Bradenton behaves the same way as metro areas in central Florida, which behaves similarly to Las Vegas, which makes sense because they are high tourist destinations, with lots of the same kinds of employment — service industries that can experience a lot of flux with the economy,” Berg said.

Nationally, the mortgage fraud risk level is about on-par with what it was pre-COVID, Berg said. The risk for fraud went down during the pandemic because most of the transactions taking place were refinances, which are considered low-risk.

But now that the cloud of COVID seems to be lifting and interest rates are expected to increase, Berg said she also expects the risk level to go up nationwide.

New restrictions from Fannie Mae and Freddie Mac capping the number of second-home mortgages that can be sold to the federal home mortgage companies at 7% each mean second-home mortgage rates will be higher, another risk for fraud.

“It’s more likely that people will lie, and say ‘this is my primary home,'” Berg said.

On CoreLogic’s list, the Las Vegas-Henderson-Paradise, Nevada metro area has the highest risk of mortgage fraud in the U.S., followed by Poughkeepsie-Newburgh-Middletown, New York.
Besides Sarasota, other Florida metro areas on the top 15 list were Miami-Fort Lauderdale-Pompano Beach (third), Tampa-St. Petersburg-Clearwater (fourth), Orlando-Kissimmee-Sanford (fifth), Cape Coral-Fort Myers (eighth), Deltona-Daytona Beach-Ormond Beach (ninth), Lakeland-Winter Haven (10th) and Palm Bay-Melbourne-Titusville (15th)

By Laura Finaldi

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