CoreLogic: Mortgage Fraud Risk Down 8.9% In Q2

Posted by Patrick Barnard on October 15, 2015 No Comments
Categories : Residential Mortgage

Mortgage fraud risk decreased 8.9% in the second quarter compared with the second quarter of 2014, driven mainly by a major decrease in identity fraud risk, according to CoreLogic's Mortgage Fraud Report.

The report measures the risk of mortgage fraud by analyzing the number of errors in mortgage applications submitted by consumers and checked with CoreLogic's LoanSafe Fraud Manager.

For the 12 months ended on June 30, the total value of applications with fraud or serious misrepresentations was about $17.3 billion compared with $19.8 billion during the same 12-month period a year earlier.

About 12,814 mortgage applications, or 0.67% of all applications checked, contained indications of fraud. That is down compared with the second quarter of 2014, when about 11,100, or 0.69% of applications, contained indications of fraud.

The report takes into account six different types of mortgage application fraud, including employment, identity, income, occupancy, property and undisclosed mortgage debt.

On a year-over-year basis, only undisclosed mortgage debt showed an increase at 1.7%.

Identity risk, meanwhile, decreased 22.7% during the same period.

As of the second quarter, states with the highest fraud risk included Florida and New York.          Â

The state with the highest year-over-year increase in fraud risk was Louisiana at 1.7%. Kansas had the largest decrease at 35.2%.

As has been the case for the past five years, jumbo mortgages exhibited the highest fraud risk, followed by low-down payment mortgages.

‘New regulations, like [the Consumer Financial Protection Bureau's qualified mortgage/ability to repay rules], as well as stricter credit overlays, have resulted in greater scrutiny of mortgage applications,’ explains Susan Allen, senior vice president of mortgage analytics at CoreLogic, in a release. ‘Greater scrutiny, in turn, has had a positive impact on the rate of fraudulent applications. In the markets where fraud remains strong, there are also significant inventories of distressed properties. Typically, this leads to large value discrepancies with nearby properties, which increases the risk of incorrect valuation, fraud-for-profit schemes and occupancy fraud on properties recently converted to rentals.’

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