CoreLogic Reports a 12.4 Percent Year-Over-Year Increase in Mortgage Fraud Risk for the Second Quarter of 2018
Risk index has continually increased for the last seven quarters
States with heavy out of state investment showed significantly higher fraud risk
All loan segments showed increased risk year over year
CoreLogic® (NYSE: CLGX), a leading global property information, analytics, and data-enabled solutions provider, today released its latest Mortgage Fraud Report. The report shows a 12.4 percent year-over-year increase in fraud risk at the end of the second quarter, as measured by the CoreLogic Mortgage Application Fraud Risk Index.
The analysis found that during the second quarter of 2018, an estimated one in 109 applications, or 0.92 percent of all mortgage applications, contained indications of fraud, compared with the reported one in 122, or 0.82 percent in the second quarter of 2017.
The CoreLogic Mortgage Fraud Report analyzes the collective level of loan application fraud risk experienced in the mortgage industry each quarter. CoreLogic develops the index based on residential mortgage loan applications processed by CoreLogic LoanSafe Fraud Manager™, a predictive scoring technology. 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.”
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.
National Mortgage Origination Fraud Index (Q3 2010 – Q2 2018)