The second quarter of 2019 saw a decrease in mortgage fraud risk but the trend may not last.
Low mortgage rates continued to boost refinance mortgage applications and those lower-risk loans helped reduce the overall risk of fraudulent information.
CoreLogic’s Mortgage Fraud Report says an estimated one in 123 mortgage applications, or 0.81% of all applications, contained indications of fraud, compared with the reported one in 109, or 0.91% in the second quarter of 2018.
But this may not be a lasting trend.
“The decrease in fraud risk mid-2019 appears temporary, based on unexpected interest rate drops and the resulting influx of low-risk refinance transactions,” said Bridget Berg, principal of Fraud Solutions Strategy for CoreLogic. “The absolute number of risky loans has not decreased but are simply part of a larger mortgage market at this time.”
Nationally, all fraud types showed decreased risk. Undisclosed Real Estate Debt fraud risk had the greatest decrease year over year, followed by decreases in Property and Income fraud types.
Companies that enable technology to instantly make an offer on a home – iBuyers – accounted for more than 1% of all home sales in 2018 and have helped to reduce fraud risk.
Although the overall risk was lower, risk increased for jumbo loans for home purchases, the only segment showing a risk increase.
New York, New Jersey and Florida remain the top three states for mortgage application fraud risk. It was the first time since 2017 that New Jersey outpaced Florida and moved into the second highest position.
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