A Relationship Among Neighborhood Traits, Home Sales and Mortgage Fraud: The Atlanta Market Leading Into the Mortgage Crash of 2008

Abstract

Reports of mortgage loan fraud grew exponentially in the years leading up to the 2008 financial crisis. We examine simple correlates between mortgage fraud and the economic, credit and loan traits within Atlanta zip codes. First, we find that higher home values and lower rates of owner-occupancy lead to higher levels of fraud. Second, we find that mortgage fraud is not correlated with the proportion of nonbank lenders. Third, we find that higher unemployment rates are positively correlated with higher levels of fraud. Finally, we find no correlation between the historic default rate and the prevalence of mortgage fraud.