Increases in Refinance Activity Influence Q3 Rate of Mortgage Fraud Risk

Refinance BHCoreLogic recently released its latest Mortgage Fraud Report and as of the end of the third quarter of 2016, the report shows a 4.4 percent decrease in fraud risk from the previous quarter. This is measured by the CoreLogic Mortgage Application Fraud Risk Index.

According to CoreLogic, this analysis found that during the third quarter of 2016, the change was driven by an increase in refinance activity which historically have a lower level of application fraud risk.

Broken down, higher loan to value (LTV) purchase loans continued to increase slightly in risk, moving from 196 to 198, while the relative volume for the segment decreased 16 percent.

In contrast, the conforming, owner-occupied refinance loan segment decreased slightly in risk from 20 to 18 quarter-over-quarter. But relative volume for the segment increased 19 percent.

The report states that Miami-Fort Lauderdale-West Palm Beach, Florida was the riskiest metro for mortgage application fraud, despite the quarter-over-quarter decrease of 13 percent.

The metros that are reported as having the greatest quarter-over-quarter growth in risk, according to CoreLogic include Deltona-Daytona Beach- Ormond Beach, Florida; New York-Newark-Jersey City, New York-New Jersey-Pennsylvania; and Tampa-St. Petersburg-Clearwater, Florida.

El Paso, Texas; Buffalo, New York; Springfield, Massachusetts; and Scranton, Pennsylvania were reported to have significant increases in risk of over 25 percent. CoreLogic states that they are watching these metros closely to determine if the increase is a short term anomaly or a long-term trend.

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.


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