Could compliance headaches be yielding at least one benefit?
Mortgage application errors as the result of fraud and misrepresentation is falling, according to new data from First American Mortgage Solutions.
The First American Loan Application Defect Index, which estimates the frequency of defects, misrepresentation and fraud in mortgage applications, fell 1.3% month over month in February. The index was 5.1% lower in February that it was one year prior. And it’s down 26.5% from its peak in October of 2013.
The index has dropped 3.8% over the last three months – and it now at its lowest point since its inception, according to First American. February was the seventh consecutive month without an increase in defect and misrepresentation risk. The downward trend may actually be due in part to the increasing cost of loan production, according to First American – one benefit of more stringent loan compliance requirements is consistently falling fraud risk.
“The continued decline in loan application and mortgage defect risk is indicative of the benefits the industry is accruing from investments in technology and improved production standards,” said Mark Fleming, chief economist at First American. “The investments to improve compliance are producing real benefits in the form of higher quality loan manufacturing processes with fewer defects and less misrepresentation.”
The First American Loan Application Defect Index, which estimates the frequency of defects, misrepresentation and fraud in mortgage applications, fell 1.3% month over month in February. The index was 5.1% lower in February that it was one year prior. And it’s down 26.5% from its peak in October of 2013.
The index has dropped 3.8% over the last three months – and it now at its lowest point since its inception, according to First American. February was the seventh consecutive month without an increase in defect and misrepresentation risk. The downward trend may actually be due in part to the increasing cost of loan production, according to First American – one benefit of more stringent loan compliance requirements is consistently falling fraud risk.
“The continued decline in loan application and mortgage defect risk is indicative of the benefits the industry is accruing from investments in technology and improved production standards,” said Mark Fleming, chief economist at First American. “The investments to improve compliance are producing real benefits in the form of higher quality loan manufacturing processes with fewer defects and less misrepresentation.”
