CoreLogic recently released its latest Mortgage Fraud Report and as of the end of the second quarter of 2016, the report shows a 3.9 percent year-over-year increase in fraud risk. This is measured by the CoreLogic Mortgage Application Fraud Risk Index.
According to CoreLogic, this analysis found that during the second quarter of 2016, an estimated 12,718 mortgage applications, or 0.70 percent of all mortgage applications, contained indications of fraud. This is compared to the number of applications reported in the second quarter of 2015 of 12,814, or 0.67 percent.
“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.”
The report states that Florida continues to be the riskiest state for mortgage application fraud. Despite this, the report notes that Florida also has the largest year-over-year decline in application fraud risk at 19 percent.
The states that are reported as having the greatest year-over-year growth in risk, according to CoreLogic include Kansas, Maine, Wisconsin, Nebraska and Arkansas. The report states that although they have the highest growth in risk, it has been shown that their overall rankings are all below the top 15. CoreLogic does acknowledge that risk appears to be less geographically concentrated than what was shown in the last annual report.
Specifically, CoreLogic reports that high-LTV purchase loans are the segment showing the greatest fraud risk increase by loan type, and income, transaction, and occupancy fraud types showed increases year-over-year. The report shows that particularly the greatest increase was found in the income fraud risk sector which hit 12.5 percent.
In the release from the company, CoreLogic states that the CoreLogic Mortgage Fraud Report analyzes the collective level of loan application fraud risk the mortgage industry is experiencing each quarter. Additionally, they state that CoreLogic develops the index based on residential mortgage loan applications processed by CoreLogic LoanSafe Fraud Manager, a predictive scoring technology. In the full report, CoreLogic includes detailed data for six fraud type indicators that complement the national index: identity, income, occupancy, property, transaction, and undisclosed real estate debt.
To view the full CoreLogic Mortgage Fraud Report click HERE.