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Mortgage Application Fraud Fell Nearly 9% in Q1 2020

CoreLogic reported that mortgage application fraud fell 8.9% from Q4 2019 to Q1 2020. Reported fraud on mortgage applications is down 26.6% annually from Q1 2019. 

The risk level is similar to Q3 2016—the time of the last significant refinance boom. 

The metro of Miami-Fort Lauderdale-West Palm Beach was found to have the highest fraud risk in the nation, despite the prevalence of fraud falling 11% when compared to Q4 2019. 

Following Miami was fellow Florida metro Deltona-Daytona Beach-Ormond Beach, which reported a month-over-month increase of 21%. 

Las Vegas; McAllen, Texas; New-York-Newark-Jersey City; and North Port Sarasota-Bradenton, Florida, followed. 

The metro of McAllen reported a 40% increase in mortgage fraud application. 

CoreLogic also found that refinances reached their highest level since Q2 2013 at 59.9% of all transactions, as the total transaction volume rose due to low-interest rates. 

Additionally, the top three states for fraud risk—Florida, New York, and Nevada—also contributed to an increase in investment purchase risk during Q1 2020. 

CoreLogic’s review of high-risk investment purchases shows that the metro of Las Vegas has a trend of buyers purchasing multiple investment properties at the same time—mostly from out-of-state investors. 

Interest rates fell to their lowest mark since January 2013, according to the latest Origination Insight Report from Ellie Mae. 

The 30-year rate on all loans fell to 3.65% in March from 3.83% for the month prior. Interest rates on 30-year loans through the Federal Housing Agency fell to 3.76% from 3.87%. 

Freddie Mac today released the results of its Primary Mortgage Market Survey, showing that the 30-year fixed-rate mortgage averaged 3.31%.

“Mortgage rates continue to hover near all-time lows for the third straight week. As a result, refinance activity remains high, but home purchase demand is weak due to economic tightening,” said Sam Khater, Freddie Mac’s Chief Economist.

While rates remain low, a new analysis by the Urban Institute says the COVID-19 health crisis is beginning to “constrict the mortgage credit box” similar to what happened during the period following the Great Recession from 2010 to 2013. 

“In the wake of the 2007–09 Great Recession, it was hard for people with less-than-perfect credit to secure a mortgage. This stood in stark contrast to the years leading up to the financial crisis when it was too easy to secure a mortgage,” the report said. 

About Author: Mike Albanese

A graduate of the University of Alabama, Mike Albanese has worked for news publications since 2011 in Texas and Colorado. He has built a portfolio of more than 1,000 articles, covering city government, police and crime, business, sports, and is experienced in crafting engaging features and enterprise pieces. He spent time as the sports editor for the "Pilot Point Post-Signal," and has covered the DFW Metroplex for several years. He has also assisted with sports coverage and editing duties with the "Dallas Morning News" and "Denton Record-Chronicle" over the past several years.

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