A high percentage of mortgage applications from house flipping is causing investigators to become increasingly alarmed. House flipping is when investors buy properties for quick resale and profit.

Lenders have reported greater occupancy fraud, employment fraud, and undisclosed debt on many of these mortgage applications.

Mortgage fraud continues to increase across the nation, rising by more than 20 percent since fraud rates reached a low point in early 2009, according to CoreLogic's 2010 Mortgage Fraud Trends Report. CoreLogic's recent study also found that one in every 24 REO sale transactions are associated with a fraudulent resale.

Fraud continues to shift to areas of the lending business where large volume increases occur over short periods of time, or where advanced risk mitigation processes are not squarely in place, says Tim Grace, senior vice president of Fraud Solutions at CoreLogic.

The biggest home flipping hot spots are Southern California, Phoenix, Detroit, and Atlanta.

Source: Open House; Flipping Tied to Mortgage Fraud, The Herald News (Jan. 16, 2011)