The extent of insurers' exposure to professional liabilityclaims from the subprime mortgage crisis remains uncertain–and onefactor that's fueled the collapse of that market is mortgage fraud,an expert has advised actuaries.

Ann Fulmer, vice president of Interthinx, an Agoura Hills,Calif.-based unit of the Jersey City, N.J. ISO, described themechanics of mortgage fraud during a meeting of the CasualtyActuaries of Greater New York last week, noting that problemsunderlying subprime loans and mortgage fraud tend to cluster.

She went on to describe schemes related to “stated-income” loanproducts that helped to push down the quality of mortgage loanunderwriting in recent years and helped to encourage borrowers tolie.

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