- Risk index decreases for the first time since Q3 2016 as lower interest rates brought an influx of low-risk refinances
- iBuyers represent a new wrinkle in the area of fraud detection
CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled solutions provider, today released its latest Mortgage Fraud Report. The report shows an 11.4% year-over-year decrease in fraud risk at the end of the second quarter, as measured by the CoreLogic Mortgage Application Fraud Risk Index, which is the first decrease since the third quarter of 2016.
The analysis found that during the second quarter of 2019, an estimated one in 123 mortgage applications, or 0.81% of all applications, contained indications of fraud, compared with the reported one in 109, or 0.91% in the second quarter of 2018.
The CoreLogic Mortgage Fraud Report analyzes the collective level of loan application fraud risk experienced in the mortgage industry 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.
“The decrease in fraud risk mid-2019 appears temporary, based on unexpected interest rate drops and the resulting influx of low-risk refinance transactions,” said Bridget Berg, principal of Fraud Solutions Strategy for CoreLogic. “The absolute number of risky loans has not decreased but are simply part of a larger mortgage market at this time.”
- New York, New Jersey and Florida remain the top three states for mortgage application fraud risk. For the first time since 2017, New Jersey outpaced Florida and moved into the second highest position.
- Eight of the top 10 riskiest states showed stable or decreasing risk over the past year.
- States with the greatest year-over-year risk growth include Idaho, Alabama, Mississippi, New York and Delaware. States with the largest decreases include Kansas, Missouri, Massachusetts, Illinois and New Mexico.
- Jumbo loans for home purchases is the only segment showing a risk increase.
- Nationally, all fraud types showed decreased risk. Undisclosed Real Estate Debt fraud risk had the greatest decrease year over year, followed by decreases in Property and Income fraud types.
- iBuyers — or companies that use technology to instantly make an offer on a home — accounted for more than 1% of all home sales in 2018 and are a contributing factor in the overall decline of fraud risk.
To view the full CoreLogic Mortgage Fraud Report, visit stage.corelogic.com/mortgagefraudreport.
Our comprehensive fraud risk analysis is based on a lender-driven mortgage fraud consortium and leading predictive-scoring technology.
The CoreLogic Mortgage Application Fraud Risk Index represents the collective level of fraud risk the mortgage industry is experiencing in each time period, based on the share of loan applications with a high risk of fraud. The index is standardized to a baseline of 100 for the share of high-risk loan applications nationally in the third quarter of 2010.
The Fraud Type Indicators are based on specific CoreLogic LoanSafe Fraud Manager alerts. These alerts are compiled consistently for all CoreLogic Mortgage Fraud Consortium members. Indicator levels are based on the prevalence and predictive ability of the relevant alerts. An increase in the indicator correlates with increased risk of the corresponding fraud type.
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