Mortgage fraud hit record highs in 2008 even as the industry made fewer home loans and reined in lending standards, according to figures released yesterday.

'Reported mortgage fraud is more prevalent now than in the heyday of the origination boom,' said Denise James and Jennifer Butts, co-authors of the Mortgage Asset Research Institute report.

Fraud jumped by 26% to a record in 2008 from the previous year, the study showed, based on data collected from roughly 70% of the nation’s lenders as well as mortgage insurance companies and mortgage investors.

While the increase in reported incidents of fraud is a sign that lenders are being more vigilant, James said that in the context of declining mortgage volume, the figures also showed that fraud is a growing problem.

Financial Times