A recent report from verification services provider Kroll Factual Data, Inc., shows the risk of mortgage fraud rose 1.1 percent throughout the country between the second and third quarters of 2012.

To assemble the report, Kroll Factual Data examined metropolitan statistical areas (MSAs) with at least 1,000 applications per quarter and isolated certain files that may contain indicators of potential mortgage origination fraud.

In some MSAs, the company found the risk of fraud rose from Q2 to Q3 by more than 50 percent.

“While fraud alerts declined in some MSAs, these declines were offset by significant increases in others. This spike in potential fraud is troubling, coming at the same time the mortgage industry is beginning to turn the corner,” said Rod Bazzani, president of Kroll Factual Data. “More importantly, the fact that red flags are rising in every area of the country highlights the continued need for lenders to remain vigilant against fraud.”

Bazzani added that recently issued regulations from the Consumer Financial Protection Bureau of which are designed to ensure verification of a borrower’s ability to repay a loan—“raise the stakes for lenders to catch fraud or inadvertent errors that might compromise lending decisions or risk buy-back requests.”

According to Kroll Factual Data, Flint, Michigan, saw the largest quarterly increase in potential application fraud, posting a 50.32 percent rise over Q2. It’s followed by: Columbia, Missouri (29.77 percent); Lancaster, Pennsylvania (28.83 percent); Tacoma, Washington (25.68 percent); and Santa Fe, New Mexico (24.24 percent).

At the other end, the MSAs with the largest decreases in potential fraud were: Champaign-Urbana, Illinois (-19.55 percent); Bridgeport-Milford, Connecticut (-18.59 percent); San Francisco-Oakland, California (-18.37 percent); Birmingham, Alabama (-17.95 percent); and Cleveland, Ohio (-17.32 percent).