IRVINE, Calif.—A new analysis has found a 16.9% increase in mortgage application fraud at the end of the second quarter as compared to one year earlier.
CoreLogic reported its Mortgage Application Fraud Risk Index found that during the second quarter of 2017, an estimated 13,404 mortgage applications, or 0.82% of all mortgage applications, contained indications of fraud, as compared with the reported 12,718, or 0.70% in the second quarter of 2016.
The CoreLogic Mortgage Fraud Report analyzes the collective level of loan application fraud risk the mortgage industry is experiencing each quarter, the company said. 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 past year we saw a relatively large increase in the CoreLogic National Mortgage Application Fraud Index,” said Bridget Berg, principal, Fraud Solutions for CoreLogic, in a statement. “If the factors that influenced the increase continue, including a shift to purchase transactions and growing wholesale channel origination activity, it is likely that mortgage application fraud risk will continue to rise as well. Fraud on cash-out refinance transactions and home equity loans may become more of a factor in the coming years as home values and equity rise.”
Among the findings:
- New York is the state with the highest level of application fraud risk. Florida, which held the top spot for the last several years, dropped to number three, thanks to a 3% decrease in application fraud risk from 2016.
- States with the greatest year-over-year growth in risk include Iowa, Indiana, Missouri, Louisiana and Idaho. Although they have the highest growth in risk, except for Louisiana, the other four states are still outside the top 25 in terms of overall risk.
- Jumbo refinance loans are the segment showing the greatest fraud risk increase by loan type.
- Occupancy, Transaction and Income fraud types showed increases year-over-year, with the greatest increase in Occupancy fraud risk at 7.0%.