The CoreLogic Quarterly Mortgage Fraud Brief analyzes the metro areas with the highest mortgage fraud risk on a quarterly basis and offers insights based on the analysis of trends found in residential mortgage loan applications processed by LoanSafe Fraud Manager.
Read the report to learn about:
- Factors causing increases in fraud risk
While fraud risk is down from last quarter, and Q2 2021, recent analysis of monthly data shows this trend is reversing and we expect fraud risk to increase in the coming months.
- Metros where fraud risk is the highest
12 of the 15 riskiest metros saw fraud risk increase compared to last quarter.
- More information coming soon
The 2022 Annual Fraud Report will be released in early September and will contain a deeper dive into the topics covered in this brief.
Get more in-depth insights in the Quarterly Mortgage Fraud Brief and see how you can better protect your business from the growing risk of mortgage fraud.
Application Fraud Risk Index Methodology
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. In previous reports, the national mortgage fraud index had a static weighted average across indexes computed for various loan segments. The static weighting method ensures that the changes in loan application volume between segments with different fraud characteristics do not spuriously indicate a change in fraud risk patterns. Based on CoreLogic latest research findings, it has been deemed that the national trend is not susceptible to spurious change and the segment weighting has been adjusted quarterly to track market changes.
The number of expected fraudulent applications is estimated by applying the rate of applications in the CoreLogic Mortgage Fraud Consortium data with high risk of fraud to the estimated loan application volume in each quarter and geography. Expected fraudulent mortgage applications are defined as having a high risk of fraud based on the CoreLogic LoanSafe Fraud Manager score.
CoreLogic Mortgage Fraud Consortium data also provides the average application loan amount by quarter and geography for high-risk fraud scores based on the LoanSafe Fraud Manager score. The average loan amount for applications with a high risk of fraud combined with the number of expected fraudulent applications is used to determine the expected total fraudulent application loan amount by quarter and geography.
The application-fraud indexes are based on specific CoreLogic LoanSafe Fraud Manager alerts. These alerts are computed consistently across time for all CoreLogic Mortgage Fraud Consortium members, regardless of whether the client has the alerts enabled or not. Thus, increased firing of an alert indicates increased risk of the corresponding fraud type. Because the CoreLogic Mortgage Application Fraud Risk Index is based on the LoanSafe Fraud Manager score, it provides a more comprehensive and robust indication of fraud trends than would result from simply summing the fraud type indexes.