CoreLogic’s latest Mortgage Fraud Report finds a 12.4 percent year-over-year increase in fraud risk at the end of the second quarter, as measured by the CoreLogic Mortgage Application Fraud Risk Index.
During the second quarter, an estimated one in 109 applications (0.92 percent) contained indications of fraud. A year earlier, it was one in 122 (0.82 percent).
New York, New Jersey and Florida remain the top three states for mortgage application fraud risk – the same positions they held as last year.
The CoreLogic Mortgage Fraud Report includes data for six fraud-type indicators that complement the national index: identity, income, occupancy, property, transaction and undisclosed real estate debt.
“This year’s trend continues to show an increase in mortgage fraud risk year-over-year,” says Bridget Berg, principal of Fraud Solutions Strategy for CoreLogic. “Because home prices are rising and demand is strong, most mortgage fraud in this type of market is motivated by bona fide borrowers trying to qualify for a mortgage.”
Berg says the most likely misrepresentations on mortgage applications are “undisclosed real estate liabilities, credit repair, questionable downpayment sources and income falsification.”
All of the top 10 riskiest states showed increases in risk year over year.
States with the greatest year-over-year risk growth include New Mexico, Mississippi, Illinois, Oklahoma and Texas.
The conforming loans for home purchases segment shows the greatest risk increase by loan type.
Income fraud risk had the greatest increase year over year, followed by occupancy and transaction fraud. Property and undisclosed real estate debt showed declines in risk.
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