The MReport Webcast: Tuesday 7/5/2016

Ethical issues with mortgage applications dropped in May, continuing a years-long downswing, according to the latest First American Loan Application Defect Index. The index, which estimates the frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage loan applications, decreased 2 point 7 percent in May and was down 10 percent compared to May of 2015.

The downward trajectory is nothing unusual, given that apart from two blips, the index has steadily decreased since October of 2013. Since then, when the index was at its highest, the defect risk has dropped 28 point 4 percent. The report found that owner-occupied loans are 30 percent less risky than investor loans. Single family properties are 11 percent less risky than condos, and FHA loans are 15 percent less risky than conventional loans.

Britain’s decision to leave the European Union has left a lot of experts in the U.S. financial community wondering exactly what face the fallout will take on the American housing market. According to a new report from the Urban Institute, the flight of capital to the relative safety of U.S. Treasuries has already driven down the rates that investors are able to demand for these investments, and they believe those falling rates will spark a refinancing boom. But the report also warned that a drop in mortgage rates may force Freddie Mac into the red for the second quarter.