The extent of insurers' exposure to professional liability claims from the subprime mortgage crisis remains uncertain–and one factor 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 the mechanics of mortgage fraud during a meeting of the Casualty Actuaries of Greater New York last week, noting that problems underlying subprime loans and mortgage fraud tend to cluster.
She went on to describe schemes related to “stated-income” loan products that helped to push down the quality of mortgage loan underwriting in recent years and helped to encourage borrowers to lie.
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