Mortgage fraud risk has dropped 7.5% year over year in the second quarter of 2022, as measured by CoreLogic’s Mortgage Application Fraud Risk Index, released in the data solutions provider’s latest Mortgage Fraud Report, issued late last week.
The decline in mid-2022 follows a large increase seen in the same period in 2021 and is partially due to the recalibration of CoreLogic’s scoring model in the first quarter of 2022. Since that update, higher risks were recorded during months in the second quarter, particularly for certain types of mortgage fraud, CoreLogic reports.
Additional key findings:
- In the second quarter of 2022, an estimated 0.76% of all mortgage applications contained fraud, about 1 in 131 applications.
- By comparison, in the second quarter of 2021, that estimate was 0.83%, or about 1 in 120 applications.
- Risks of income and property fraud posted the largest year-over-year increases in the second quarter, a respective 27.3% and 22.6%.
- Nationally, five of the six types of mortgage fraud types CoreLogic tracks showed increased risks since the second quarter of 2021. The exception was undisclosed real estate debt, which declined by 12%.
- The top five states for fraud risk increases are Rhode Island, South Dakota, Kentucky, New York and Nebraska. Less-populous states are prone to volatile index values, as small groups of higher-risk loans are more likely to move the index. For instance, Rhode Island’s 60% year-over-year fraud risk increase was in part due to a large share of government-backed loans, which have become riskier over the past year.
- New York moved into the top position for mortgage application fraud risk, with Florida, Rhode Island, Nevada and Connecticut rounding out the top five.
The takeaway:
“Income fraud risk remains a top concern for lenders, but there is a rising focus on property value risk as home prices slow their growth and homes are taking longer to sell. CoreLogic data backs up those concerns, as our most predictive flags for both income and property frauds increased in the last year more than 20%,” said Bridget Berg, principal, Industry & Fraud Solutions.
To view the full CoreLogic Mortgage Fraud Report, visit www.corelogic.com/mortgagefraudreport.
