- Risk Index decrease was driven by a record volume of refinances; however, purchase applications showed a 6% increase in risk
- Investment properties accounted for the highest-risk applications
CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled solutions provider, today released its latest Mortgage Fraud Report. The report shows a 26.3% year-over-year decrease in fraud risk at the end of the second quarter of 2020, as measured by the CoreLogic Mortgage Application Fraud Risk Index. This marks the second year of substantial decreases in risk.
Throughout the second quarter of 2020, an estimated one in 164 mortgage applications, or 0.6% of all applications, contained indications of fraud, compared with the reported one in 123 mortgages, or 0.8% in the second quarter of 2019. Continued low mortgage rates and a record volume of refinances pushed the overall fraud risk down. However, risk in the purchase segment increased 6%, with investment properties driving the highest risk in both purchase and refinance populations.
“The large drop in fraud risk in the past year was primarily driven by record-high refinancing, which is traditionally lower risk transactions,” said Bridget Berg, Principal of Fraud Solutions Strategy for CoreLogic. “However, we still see elevated levels of risk in purchase transactions, and we have not yet seen the long-term impacts of the COVID-19 pandemic, so it’s imperative risk managers remain vigilant in searching out potential fraud.”
- Occupancy fraud risk was the only fraud type segment to experience an increase year over year, jumping 25.8% between Q2 2019 and Q2 2020.
- New York, Nevada and Florida were the top three states with the largest amount of mortgage application fraud risk. Nevada moved into the top three for the first time since 2014, showing a risk increase of 8% year-over-year.
- Nevada was also the only state in the top five that showed increased risk when compared to 2019.
- States with the greatest year-over-year risk growth include New Hampshire, Wyoming, North Dakota, Nevada and Rhode Island. Lower-populated states tend to show greater volatility due to less lending activity.
National Mortgage Origination Fraud Index (Q3 2010 – Q2 2020)
The CoreLogic Mortgage Fraud Report analyzes the collective level of loan application fraud risk experienced in the mortgage industry 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.
To view the full CoreLogic Mortgage Fraud Report, visit corelogic.wpengine.com/mortgagefraudreport.
Our comprehensive fraud risk analysis is based on a 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.
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 predictive ability of the relevant alerts. An increase in the indicator correlates with increased risk of the corresponding fraud type.
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