During each of the past five months, the risk of fraud on applications for a residential loan has moved higher. The Dakotas are emerging as a troubled region.
The Loan Application Defect Index, an estimate of mortgage loan defect rates over time, came in at 81 for the month of April 2017.
Compared to the preceding month, the index, which represents the
frequency that information submitted in residential loan application has defects, rose 3 percent.
It was the fifth month in a row that the index deteriorated.
First American Financial Corp. reported the index.
The month-over-month rise means that the risk of fraudulent application data rose.
An 8 percent increase in the index was recorded versus the same month last year.
Risk was highest in North Dakota, where the index was 96. Montana was next at 95, followed by Vermont’s 94, Louisiana’s 93 and Mississippi’s 93.
The lowest index was in Delaware: 65.
The biggest rise in risk from a year earlier was in South Dakota, where the index was up by 49 percent.
“The pace of defect risk growth is as strong as we have seen since the index began in 2011, adding to the concern over the five-month trend,” First American Chief Economist Mark Fleming said in the report. “While we have recently noted that part of the rise in overall risk is due to the market’s shift toward riskier purchase transactions, the fact that risk in refinance transactions is also on the rise underscores the need for caution.”
First American said the index on refinance transactions was up 5 percent from
a month earlier and 3 percent from a year earlier.
On purchase financing transactions, the index rose 2 percent from March 2017 and 7 percent from April 2016.
