CoreLogic says rising home values could soon drive fraud on cash-out refinance transactions and home equity loans
An estimated 13,404 mortgage applications, representing 0.82% of all applications, filed during the second quarter contained indications of fraud, according to the Mortgage Application Fraud Risk Index released by CoreLogic.
The second-quarter figure is a 16.9% increase from the 12,718 mortgage applications, comprising 0.70% of total applications, that contained indications of fraud recorded in the second quarter of 2016.
By state, mortgage application fraud risk was highest in New York, pushing it to overtake Florida as the state with the highest risk. After holding the top spot for the last several years, Florida is now in third after posting a 3% drop in risk compared to 2016.
The largest year-over-year increase in risk was recorded in Iowa. Other states that saw the biggest growths in risk were Indiana, Missouri, Louisiana, and Idaho. With the exception of Louisiana, these states remain out of the top 25 with the highest risk despite recording the quarter’s highest growth.
In terms of loan type, the greatest risk of fraud was seen in the jumbo refinance loan segment. Additionally, fraud related to occupancy, transaction, and income posted increases from a year ago, with risk for occupancy fraud posting the biggest growth at 7%.
“This past year we saw a relatively large increase in the CoreLogic National Mortgage Application Fraud Index,” said Bridget Berg, principal for fraud solutions at CoreLogic. “If the factors that influenced the increase continue, including a shift to purchase transactions and growing wholesale-channel origination activity, it is likely that mortgage application fraud risk will continue to rise as well. Fraud on cash-out refinance transactions and home equity loans may become more of a factor in the coming years as home values and equity rise.”
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The second-quarter figure is a 16.9% increase from the 12,718 mortgage applications, comprising 0.70% of total applications, that contained indications of fraud recorded in the second quarter of 2016.
By state, mortgage application fraud risk was highest in New York, pushing it to overtake Florida as the state with the highest risk. After holding the top spot for the last several years, Florida is now in third after posting a 3% drop in risk compared to 2016.
The largest year-over-year increase in risk was recorded in Iowa. Other states that saw the biggest growths in risk were Indiana, Missouri, Louisiana, and Idaho. With the exception of Louisiana, these states remain out of the top 25 with the highest risk despite recording the quarter’s highest growth.
In terms of loan type, the greatest risk of fraud was seen in the jumbo refinance loan segment. Additionally, fraud related to occupancy, transaction, and income posted increases from a year ago, with risk for occupancy fraud posting the biggest growth at 7%.
“This past year we saw a relatively large increase in the CoreLogic National Mortgage Application Fraud Index,” said Bridget Berg, principal for fraud solutions at CoreLogic. “If the factors that influenced the increase continue, including a shift to purchase transactions and growing wholesale-channel origination activity, it is likely that mortgage application fraud risk will continue to rise as well. Fraud on cash-out refinance transactions and home equity loans may become more of a factor in the coming years as home values and equity rise.”
Related stories:
Refis continue gains in application activity share
Mortgage defect index posts 7th consecutive increase
