Applications for home loans are less likely to contain fraudulent information than they were a year earlier. Tougher mortgage regulations and guidelines have played a role in the improvement.
During the 12 months ended June 30, there were $17.3 billion in mortgage applications with fraud or serious misrepresentations as measured by the Mortgage Application Fraud Risk Index.
The index, which is
comprised of six subindices that measure different types of mortgage application fraud, retreated from the same period a year earlier, when the total was $19.8 billion.
CoreLogic Inc. reported the index as part of its Mortgage Fraud Report.
The index is based on residential loan applications processed through CoreLogic’s LoanSafe Fraud Manager. On a year-over-year basis, the index was down 8.9 percent.
“New regulations, like Qualified Mortgage and Ability to Repay, as well as stricter credit overlays, have resulted in greater scrutiny of mortgage applications,” CoreLogic Senior Vice President of Mortgage Analytics Susan Allen said in the report. “Greater scrutiny, in turn, has had a positive impact on the rate of fraudulent applications.”
During just the second-quarter 2015, there were 12,814 applications that contained indications of fraud. That worked out to 0.67 percent of all applications.
In the second-quarter 2014, there were 11,100 questionable applications, accounting for 0.69 percent of all applications.
Florida was the state with the highest risk of fraud. New York followed, then Hawaii, New Jersey and Nevada.
Risk was up in Louisiana by 17 percent — the biggest increase of any state.
A 35 percent decline in Kansas was the best improvement.
Among the six components of the national index, the risk of identity fraud dropped 23 percent — the biggest drop of any category.
The risk of undisclosed mortgage debt was up two percent — the only category with an increase.
“As has been the case for the past five years, jumbo mortgages have exhibited the highest fraud risk, followed by low down payment mortgages,” the report stated.
