Report: Arizona Is Scene of Rising Home Loan Fraud.

Chicago -- There has been somewhat of a shift in the states that have the greatest mortgage fraud problems, according to a periodic report from the National Home Equity Mortgage Association and the Mortgage Asset Research Institute that concentrates on issues in the nonprime lending sector.

Notably, NHEMA said, "When fraud reports are broken out for [nonprime] lending, the state indices show South Carolina falls significantly in its fraud ranking."

Arizona, meanwhile, "appears to have growing problems," the association said.

NHEMA also noted that "serious early defaults are a leading indicator of mortgage fraud, and [nonprime] loans from the 2004 book of business in Oklahoma, Mississippi and Ohio are showing these defaults at more than twice the national average."

The report, which also tracks trends in the prime sector, also found that "prime loan concerns continue to rise in the Midwest, and cities of moderate size appear to have particular problems with recent originations that become seriously delinquent."

Other general fraud trends noted in the study include:

* For the second year in a row, Georgia has the highest rate of reported fraud during the prior four-year period.