September 14, 2018

Mortgage App Fraud On the Rise

MReport--Seth Welborn 

Fraud risk is up, according to the latest CoreLogic Mortgage Fraud Report. According to the report and the CoreLogic Mortgage Application Fraud Risk Index, mortgage risk is up 12.4 percent year over year as of Q2 2018.

The report found that in Q2 2018, around one in 109 mortgage applications contained indications of fraud, or 0.92 percent, compared with one in 122, or 0.82 percent in Q2 2017. Additionally The National Fraud Index  grew from 133 to 149 year over year. According CoreLogic, desperate homebuyers fighting against rising home prices are one of the reasons why.

“This year’s trend continues to show an increase in mortgage fraud risk year over year,” said Bridget Berg, Principal of Fraud Solutions Strategy for CoreLogic. “Because home prices are rising, and demand is strong, most mortgage fraud in this type of market is motivated by bona fide borrowers trying to qualify for a mortgage. Undisclosed real estate liabilities, credit repair, questionable down payment sources and income falsification are the most likely misrepresentations.”

According to the report, in Q2 2018 New York, New Jersey and Florida were the top three states for mortgage application fraud risk, same as Q2 2017. Additionally, the top three states for  mortgage application fraud risk showed some level of increase year over year. New Mexico, Mississippi, Illinois, Oklahoma and Texas all showed the highest levels of increased fraud risk year over year, with New Mexico, Illinois and Oklahoma showing fraud risks higher than the National Index.

Conforming loans appeared to have the highest increase in risk, while income fraud was the most prevalent fraud type. Income fraud means the misrepresentation of the existence, continuance, source, or amount of income used to qualify, and was up 22.1 percent in Q2 2018 year over year.

Occupancy fraud risk (when mortgage applicants deliberately misrepresent their intended use of a property) also increased, by 3.5 percent, and transaction fraud (when the nature of the transaction is misrepresented) increased by 0.6 percent.

Find the full report from CoreLogic here.


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