CoreLogic Reports a 3.9 Percent YOY Increase in Mortgage Fraud Risk in the Second Quarter of 2016
Real Estate Industry and Trade Media
Campbell Lewis Communications
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September 22, 2016, Irvine, Calif. –
—Florida Remains the State with the Highest Overall Fraud Risk; Kansas Has the Largest YOY Increase in Fraud Risk—
CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled solutions provider, today released its latest Mortgage Fraud Report. As of the end of the second quarter of 2016, the report shows a 3.9 percent year-over-year increase in fraud risk, as measured by the CoreLogic Mortgage Application Fraud Risk Index.
The analysis found that during the second quarter of 2016, an estimated 12,718 mortgage applications, or 0.70 percent of all mortgage applications, contained indications of fraud, as compared with the reported 12,814, or 0.67 percent in the second quarter of 2015.
The CoreLogic Mortgage Fraud Report analyzes the collective level of loan application fraud risk the mortgage industry is experiencing each quarter. CoreLogic develops the index based on residential mortgage loan applications processed by CoreLogic LoanSafe Fraud Manager™, a predictive scoring technology. The report includes detailed data for six fraud type indicators that complement the national index: identity, income, occupancy, property, transaction, and undisclosed real estate debt.
“Mortgage application fraud risk will likely rise over the next few years if current trends of higher LTV purchases and increased credit availability continue,” said Bridget Berg, senior director, Fraud Solutions Strategy for CoreLogic. “Because post-fund quality control findings are biased to specific types of fraud that are easy to detect shortly after closing, lenders should not rely only on those results to measure fraud risk.”
Among the highlights of the report:
- Florida continues to be the riskiest state for mortgage application fraud. However, Florida also has the largest year-over-year decline in application fraud risk at 19 percent.
- States with the greatest year-over-year growth in risk include Kansas, Maine, Wisconsin, Nebraska and Arkansas. Although they have the highest growth in risk, their overall rankings are all below the top 15. Risk appears to be less geographically concentrated than shown in our last annual report.
- High-LTV purchase loans are the segment showing the greatest fraud risk increase by loan type.
- Income, Transaction and Occupancy fraud types showed increases year-over-year, with the greatest increase in Income fraud risk at 12.5 percent.
National Mortgage Origination Fraud Index (Q3 2010 – Q2 2016)
To view the full CoreLogic Mortgage Fraud Report, visit corelogic.com/mortgagefraudreport.
Our comprehensive fraud risk analysis is based on the industry’s largest lender-driven mortgage fraud consortium and leading predictive-scoring technology.
The CoreLogic Mortgage Application Fraud Risk Index represents the collective level of fraud risk the mortgage industry is experiencing in each time period, based on the share of loan applications with a high risk of fraud. The index is standardized to a baseline of 100 for the share of high-risk loan applications nationally in the third quarter of 2010. Each 1-point change in the index represents a 1 percent change in the share of mortgage applications having a high risk of fraud.
The estimated number of fraudulent applications is derived by applying the current risk level of CoreLogic Mortgage Fraud Consortium applications to industry volumes.
The Fraud Type Indicators are based on specific CoreLogic LoanSafe Fraud Manager alerts. These alerts are compiled consistently for all CoreLogic Mortgage Fraud Consortium members. Indicator levels are based on the prevalence and predictiveness of the relevant alerts. An increase in the indicator correlates with increased risk of the corresponding fraud type.
CoreLogic (NYSE: CLGX) is a leading global property information, analytics and data-enabled solutions provider. The company's combined data from public, contributory and proprietary sources includes over 4.5 billion records spanning more than 50 years, providing detailed coverage of property, mortgages and other encumbrances, consumer credit, tenancy, location, hazard risk and related performance information. The markets CoreLogic serves include real estate and mortgage finance, insurance, capital markets, and the public sector. CoreLogic delivers value to clients through unique data, analytics, workflow technology, advisory and managed services. Clients rely on CoreLogic to help identify and manage growth opportunities, improve performance and mitigate risk. Headquartered in Irvine, Calif., CoreLogic operates in North America, Western Europe and Asia Pacific. For more information, please visit www.corelogic.com.
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