Prospective borrowers have recently escalated their efforts to deceive lenders about their income. But the risk of valuation fraud has greatly diminished.
During the second quarter of this year, an estimated $5.3 billion in residential loan applications with fraudulent information were submitted to U.S. home lenders.
California accounted for $0.864 billion of the second-quarter total, while New York was responsible for $0.273 billion, Florida represented $0.273 billion, and Texas was the location of $0.261 billion.
The findings were detailed in the CoreLogic 2013 Mortgage Fraud Report.
Unlike the other top-five states, where population is near or exceeds 20 million, No. 5 Virginia, with $0.231 billion in fraudulent applications, has a population of just over 8 million.
The U.S. total wasn’t much different from the first quarter, when an estimated $5.2 in fraudulent applications were submitted.
During the same period in 2012, the national estimate was $5.5 billion.
The peak of just over $6 billion was reached in the third-quarter 2012.
Around $30 billion in fraudulent mortgage applications were estimated for the first half of this year and all of last year, Dr. Mark Fleming, the chief economist at CoreLogic, noted in the report.
“While the propensity toward application fraud risk has declined based on our index, as the housing market recovers, the volume of mortgage applications is rising and increasing the total amount of fraudulent mortgage loan application dollars,” Fleming stated.
The report indicated that the second-quarter 2013 risk index for income application fraud was up 7.5 percent from the first quarter and has jumped 13.3 percent from the second-quarter 2012.
The risk of undisclosed debt inched up only 0.2 percent and was up just 2.1 percent from a year earlier.
While occupancy application fraud was up 2.6 percent on a quarter-over-quarter basis, it was barely changed (up 0.7 percent) on a year-over-year basis.
Similarly, the employment application risk index inched up 1.5 percent from the first quarter but was unchanged from the second quarter of last year.
Identity fraud risk declined 3.2 percent and tumbled 14.5 percent between the second quarter of 2012 and 2013.
The biggest improvement was made with property valuation fraud — with that index dropping 7.1 percent between the first and second quarters of this year.
The property application fraud risk index plummeted 20.8 percent compared to the same quarter last year.
Between the second quarter of last year and the second quarter of 2013, application fraud risk was up 30.1 percent in Ohio. Hawaii saw a 19.6 percent increase, while Kentucky worsened by 16.6 percent, Connecticut was up 15.0 percent, and risk in Alaska climbed 13.8 percent.
The biggest decline was in Washington, D.C.: 29.0 percent. Other states to see around a 20 percent decline included Nevada, Idaho, Delaware and Oregon.
