CoreLogic: 9% Decrease in Mortgage Fraud Risk in 2Q

CoreLogic, Irvine, Calif., reported a nearly 9 percent decrease in mortgage fraud risk during the second quarter.  

The company’s Mortgage Fraud Report said as of the end of the second quarter, mortgage fraud risk fell by 8.9 percent year-over-year decrease as measured by its Mortgage Application Fraud Risk Index. For the 12 months ending in the second quarter, the report estimated the total value of applications with fraud or serious misrepresentations at $17.3 billion as compared to $19.8 billion a year ago.  

The report said 12,814 mortgage applications, or 0.67 percent of all mortgage applications, contained indications of fraud, as compared with the reported 11,100 or 0.69 percent a year ago.  

“New regulations, like Qualified Mortgage and Ability to Repay, as well as stricter credit overlays, have resulted in greater scrutiny of mortgage applications,” said Susan Allen, senior vice president of Mortgage Analytics with CoreLogic. “Greater scrutiny, in turn, has had a positive impact on the rate of fraudulent application. 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.”  

Other report highlights:  

–The 10 highest risk states in terms of mortgage fraud as measured by CoreLogic remained mostly stable. Florida maintained its position as the nation’s highest risk state. New York moved up to number two from number three in 2014. Rhode Island fell out of the top 10, being replaced by the District of Columbia. Other states in the riskiest 10: Hawaii, New Jersey, Nevada, California, Illinois, Maryland and Georgia.  

–Louisiana had the highest year-over-year growth in mortgage application fraud risk at 17 percent; Kansas had the largest decline at 35.2 percent.  

–Of the six components in the CoreLogic Mortgage Application Fraud Type Indexes, undisclosed mortgage debt risk showed the only increase at 1.7 percent; identity risk had the largest year-over-year decline at 22.7 percent.  

–Jumbo mortgages have exhibited the highest fraud risk for the fifth straight year, followed by low-down payment mortgages.