Florida continues to have the dubious distinction of being the state in the nation with the highest incidences of mortgage fraud.

According to a report released by the LexisNexis Mortgage Asset Research Institute, Florida led the nation in mortgage fraud in 2009, as it did in 2006 and 2207. Rhode Island grabbed the infamous limelight from Florida in 2008. The second to Florida in 2009 was New York, followed by California.

Not only was Florida ranked first place in mortgage frauds, but the twin-city region – Miami/Fort Lauderdale – was ranked as the fourth metropolitan region in the country for mortgage frauds. According to the report mortgage fraud in the twin cities represented four percent of all mortgage fraud reported across the nation. The leading metropolitan region with mortgage fraud was the New York-New Jersey-Long Island region, with Los Angeles-Riverside second, and the tri-state Chicago-Gary-Kenosha region third.

The incidences of fraud in Florida mostly related to a large percentage of over-inflated appraisals, a trend also seen in other states. According to the report 36 percent of mortgage loans made nationwide were based on fraudulent, inflated appraisals of the property in the mortgage application, and comparable properties. This act increased the value of the property for which the mortgage was sought, and accordingly, the size of the loan.

Bertram Rawlings, a retired Pembroke Pines appraiser, commenting on the report of high percentages of fraudulent property appraisals in Florida attributed this to the declining value of properties, especially in South Florida. “It is significant that Florida began heading the list of mortgage fraud in 2006. This was the time that property values began falling, as the housing crisis began. Appraisers were pressured and bribed to provide inflated appraisals by brokers and some lenders. Unfortunately, some unprofessional appraisers gave in to the pressure. As property values worsened inflated appraisals became more prevalent “

A Miami Lakes, mortgage broker, giving her name only as Christine, said she wasn’t surprised by the report. “Florida has an over-supply of unsold houses. For some realtors, brokers and lenders to survive, they unfortunately use fraud. Moreover, as the credit market tightens, more home-buyers resort to fraud on their mortgage application. Not many homes would be sold without some aspect of fraud. That’s just the truth.”

Contrary to the opinions expressed by Christine, the report indicated that there was a significant decline in mortgage application fraud in Florida from 2008 to 2009. A Miami mortgage lender said that this was because lenders are now more alert to mortgage fraud, and are taking more precautions, although “some very crafty brokers still get applications pass our filters. However, the state attorney general has embarked on aggressive enforcement against mortgage fraud, so these brokers have to be very careful.”