CoreLogic Report Cites 12.4% increase in 2Q Mortgage Fraud Risk

Mike Sorohan msorohan@mba.org

September 13, 2018

CoreLogic, Irvine, Calif., reported a 12.4 percent year-over-year increase in fraud risk at the end of the second quarter, the seventh consecutive quarterly increase.

The company's quarterly Mortgage Application Fraud Risk Index estimated one in 109 applications, or 0.92 percent of all mortgage applications, contained indications of fraud in the second quarter, compared to one in 122, or 0.82 percent, a year ago.

The report said states with heavy out-of-state investment showed significantly higher fraud risk. It said all loan segments showed increased risk year over year.

The report includes detailed data for six fraud type indicators that complement the national index: identity, income, occupancy, property, transaction and undisclosed real estate debt.

"This year's trend continues to show an increase in mortgage fraud risk year over year," said Bridget Berg, principal of Fraud Solutions Strategy for CoreLogic. "Because home prices are rising, and demand is strong, most mortgage fraud in this type of market is motivated by bona fide borrowers trying to qualify for a mortgage. Undisclosed real estate liabilities, credit repair, questionable down payment sources and income falsification are the most likely misrepresentations."

Other report findings:

--New York, New Jersey and Florida remain the top three states for mortgage application fraud risk, maintaining the same positions as last year.

--All of the top 10 riskiest states showed increases in risk year over year.

--States with the greatest year-over-year risk growth include New Mexico, Mississippi, Illinois, Oklahoma and Texas. Of these, New Mexico, Illinois and Oklahoma now have risk levels greater than the National Index, which grew from 133 to 149 year-over-year.

--The conforming loans for home purchases segment shows the greatest risk increase by loan type.

--Income fraud risk had the greatest increase year over year, followed by occupancy and transaction fraud. Property and undisclosed real estate debt showed declines in risk.

Share this article