There was little change in the defect risk for mortgage loan application in December compared to the previous month but that could be the calm before the storm
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There was little change in the default risk for mortgage loan application in December compared to the previous month but that could be the calm before the storm.
First American Financial Corporation says that its index which tracks the frequency of defects, fraudulence and misrepresentation in home loan applications was up 20% year-over-year but almost 19% below the high point for risk in October 2013.
The five states with the greatest year-over-year increase in defect frequency are: South Dakota (+46.7%), New Mexico (+38.1%), Idaho (+31.6%), North Dakota (+31.1%) and Nebraska (+29.3%).
The pause on month-over-month increases in the index follows a 7-month period of rises.
“Much of the elevated risk can be attributed to an increase in the share of purchase mortgage transactions, which tend to carry more risk,” said First America’s chief economist Mark Fleming. “It’s possible that all economists agree, a rarity, that mortgage rates will increase in 2018, which should increase the market share of purchase mortgage transactions, putting upward pressure on the overall risk of defect, fraud and misrepresentation.”
“We have seen this before, in 2013, as mortgage rates rise, so does overall defect, fraud and misrepresentation risk,” said Fleming.
Acquisition of BoA line business completes
First American’s Mortgage Solutions division has completed its acquisition of the lien release business of Bank of America this week with all employees transferring to First American.
As part of the agreement, First American will provide lien release services to the Bank of America.
First American Financial Corporation says that its index which tracks the frequency of defects, fraudulence and misrepresentation in home loan applications was up 20% year-over-year but almost 19% below the high point for risk in October 2013.
The five states with the greatest year-over-year increase in defect frequency are: South Dakota (+46.7%), New Mexico (+38.1%), Idaho (+31.6%), North Dakota (+31.1%) and Nebraska (+29.3%).
The pause on month-over-month increases in the index follows a 7-month period of rises.
“Much of the elevated risk can be attributed to an increase in the share of purchase mortgage transactions, which tend to carry more risk,” said First America’s chief economist Mark Fleming. “It’s possible that all economists agree, a rarity, that mortgage rates will increase in 2018, which should increase the market share of purchase mortgage transactions, putting upward pressure on the overall risk of defect, fraud and misrepresentation.”
“We have seen this before, in 2013, as mortgage rates rise, so does overall defect, fraud and misrepresentation risk,” said Fleming.
Acquisition of BoA line business completes
First American’s Mortgage Solutions division has completed its acquisition of the lien release business of Bank of America this week with all employees transferring to First American.
As part of the agreement, First American will provide lien release services to the Bank of America.
