For the second straight year, Washington, D.C., is the place lenders are most likely to encounter mortgage fraud, according to the annual Mortgage Fraud Risk Report released by Interthinx.

Interthinx, a subsidiary of First American Financial Corporation, annually studies loan applications processed by its FraudGUARD system to determine the riskiest places in the country for mortgage fraud. What it found from its study of applications in 2013 was that fraud risk nationally rose by 4 index points to a total of 104. This continues the rising trend in fraud risk observed over the past three years as inventories shrink, prices rise, and markets stabilize.

More alarming is that nationally, the risk of occupancy fraud - whereby a borrower lies that a house will be occupied in order to secure a mortgage - rose 24 percent to an index rating of 135. Greeley, Colorado, was the riskiest for occupancy fraud risk, with an index of 227. According to Interthinx, this increase is likely due to a more purchase-driven market and continued investor interest in acquiring real estate.

The District of Columbia remained atop the list of riskiest states, with a mortgage fraud risk index of 142. California was a close second on the list with an index of 141, which is up 12 percent from 2012. Nevada, Illinois, Florida, Alaska, Hawaii, Colorado, Maryland, and New Jersey rounded out the top 10 riskiest states. The least risky state in the report is Maine, which has a risk index rating of 55. Mississippi, South Dakota, Nebraska, Wyoming, North Dakota, West Virginia, Vermont, Iowa, and Kansas were the other nine least risky states.

Perhaps encouraging is Interthinx's finding that the geographic distribution of fraud risk was less dispersed in 2013 than it was in 2012. Still, California holds an unusually intense concentration of risks, claiming nine of the top 10 riskiest metropolitan statistical areas, or MSAs; 18 of the 25 riskiest ZIP codes; five of the 10 riskiest MSAs for identity fraud; seven of the 10 riskiest MSAs for occupancy fraud; and eight of the 10 riskiest MSAs for income and employment fraud. (Read complete article.) 

CoreLogic released its February 2014 National Foreclosure Report with a supplement featuring quarterly shadow inventory data as of January 2014. There were 43,000 completed foreclosures in the United States in February 2014, down from 51,000 in February 2013, a year-over-year decrease of 15 percent.

On a month-over-month basis, completed foreclosures decreased 13.1 percent from 50,000 in January 2014. National residential shadow inventory was 1.7 million homes as of January 2014 compared to 2.2 million in January 2013, a year-over-year decrease of 23 percent.

Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 4.9 million completed foreclosures across the country.

As of February 2014, approximately 752,000 homes in the United States were in some stage of foreclosure, known as the foreclosure inventory, compared to 1.2 million in February 2013, a year-over-year decrease of 35 percent. Month over month, the foreclosure inventory was down 3.3 percent from January 2014. The foreclosure inventory as of February represented 1.9 percent of all homes with a mortgage, compared to 2.9 percent in February 2013. At the end of February 2014, there were 1.9 million mortgages, or 4.9 percent, in serious delinquency, defined as 90 days or more past due, including those loans in foreclosure or real estate owned (REO).

"Although there is good news that completed foreclosures are trending lower, the bigger news is the impressive decline in the foreclosure and shadow inventories," said Dr. Mark Fleming, chief economist for CoreLogic. "Every state has had double-digit, year-over-year declines in foreclosure inventory, which is reflected in the $70 billion decline in the shadow inventory." (Read complete article.)