Earlier this month I wrote about First American Real Estate Solutions' strategic alliance with CoreLogic Systems. Another company strategically aligned with First American is BasePoint Analytics, a provider of scientific fraud analytics and consulting services. Yesterday, BasePoint released the results of a new study that shows that up to 70 percent of early mortgage payment defaults can be linked to significant misrepresentations on loan applications.

According to BasePoint, loans that contain significant misrepresentations are up to five times more likely to default in the first six months than loans that do not. In all, BasePoint analyzed over 16,000 loans that were confirmed to contain serious misrepresentations and that later led to a default. These misrepresentations included inflated income, overvalued property appraisals, fictitious employer referrals, and falsified tax returns. As one might expect, the study concludes that misrepresentations grossly affect the risk of a real estate loan.