Nationwide, one in every 200 residential loans funded last year, totaling $14 billion, involved fraud, according to First American CoreLogic.  Despite what looks like an unsettling amount of shadiness lurking within the mortgage market, the company says the fraud rate has been steadily declining for the past three years and is now about 25 percent lower than when it peaked in the third quarter of 2007.

Since then, First American notes, lenders have been more aggressive in curtailing mortgage fraud – a prudent reaction considering banks have been forced to buy back billions of dollars in fraudulent loans sold to investors during the boom, when standards were lower and many loans were made without verifying the applicant’s information.  "In 2010, 2011, and 2012 you won’t see nearly the amount of [fraud] reports that you’re seeing today," said Tim Grace, SVP of fraud analytics at First American CoreLogic.

First American CoreLogic says 25 percent of foreclosures show fraud in the initial application, and as much as 70 percent of early payment defaults show indications of fraudulent activity in the application process.  The company’s conclusions are based on its analysis of 80 million loans passing through its proprietary national fraud data repository.