IRVINE, Calif.—There was a 3.9% year-over-year increase in mortgage fraud risk at the end of Q2, 2016, as measured by the CoreLogic Mortgage Application Fraud Risk Index.
According to the company’s Mortgage Fraud Report, during the second quarter of 2016, an estimated 12,718 mortgage applications, or 0.70% of all mortgage applications, contained indications of fraud, as compared with the reported 12,814, or 0.67% in the second quarter of 2015.
The CoreLogic Mortgage Fraud Report analyzes the collective level of loan application fraud risk the mortgage industry is experiencing 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.
“Mortgage application fraud risk will likely rise over the next few years if current trends of higher LTV purchases and increased credit availability continue,” said Bridget Berg, senior director, fraud solutions strategy for CoreLogic. “Because post-fund quality control findings are biased to specific types of fraud that are easy to detect shortly after closing, lenders should not rely only on those results to measure fraud risk.”
Among the highlights of the report:
- Florida continues to be the riskiest state for mortgage application fraud. However, Florida also has the largest year-over-year decline in application fraud risk at 19%.
- States with the greatest year-over-year growth in risk include Kansas, Maine, Wisconsin, Nebraska and Arkansas. Although they have the highest growth in risk, their overall rankings are all below the top 15. Risk appears to be less geographically concentrated than shown in CoreLogic’s last annual report.
- High-LTV purchase loans are the segment showing the greatest fraud risk increase by loan type.
- Income, transaction and occupancy fraud types showed increases year-over-year, with the greatest increase in income fraud risk at 12.5%.