A significant improvement in application fraud on loans to finance home purchases pulled down overall risk from a month earlier and a year earlier.
The Loan Application Defect Index, an estimate of mortgage defect and fraud rates over time, tumbled 2.4 percent in May from the preceding month.
An decrease in the index is an indication that a lower number of defect indicators have been identified on applications for residential real estate loans.
First American
Financial Corp. reported the index Thursday based on applications processed through its FraudGuard system.
The index has fallen 3.6 percent when compared to May 2017.
First American noted that the index has retreated 21.6 percent versus the high point reached in October 2013.
Behind the improvement was the index for purchase transactions, which sank 4.6 percent from April. Risk on purchase-money applications has plunged 7.8 percent from a year previous. In fact, risk on purchase applications has fallen nearly 10 percent over the past five months.
“There’s no better time to have loan application misrepresentation, defect and fraud risk on purchase transactions on the decline than when the market share of purchase transactions is rising,” First American
Chief Economist Mark Fleming said in the announcement.
There was no change in the refinance index, though it has worsened by 4.4 percent over the past year.
Risk in Arkansas has increased on a year-over-year basis by 12.0 percent — more than any other state. With a 20.4 percent decline, South Carolina saw the largest drop.
