CoreLogic Announces 37.2% Year-Over-Year Nationwide Increase in Mortgage Fraud Risk in Q2 2021
IRVINE, Calif .– (COMMERCIAL THREAD) – CoreLogic, one of the world’s leading providers of real estate information, analytics and data-driven solutions, today released its latest Mortgage Fraud Report. The report shows a 37.2% year-over-year increase in fraud risk at the end of the second quarter of 2021, as measured by the CoreLogic Mortgage Fraud Risk Index. The significant increase for mid-2021 follows a sharp drop seen in 2020 – a decrease mainly due to the surge in traditionally low-risk refinancing during the pandemic. The current risk level is similar to that of mid-2019.
In the second quarter of 2021, an estimated 0.83% of all mortgage applications were fraudulent, or about 1 in 120 applications. For comparison, in the second quarter of 2020 the estimate was 0. 61%, or about 1 in 164 applications. Persistent low mortgage rates and a record volume of refinancing have reduced the overall risk of fraud. However, the risk in the purchasing segment increased by 6%, with investment properties representing the highest risk in the buying and refinancing populations.
“The refinancing opportunities that drove loan volumes up during the pandemic may be dwindling. The outlook is for fewer low-risk refinances versus purchases and cash-in refinances, which translates into a higher risk environment for fraud, ”said Ann Regan, director of product management at CoreLogic.
Highlights of the report:
Nationally, most types of fraud were at increased risk. Transaction risk increased 34.2% year-on-year. The risk of income and property fraud has declined slightly, aligning with strong growth in the labor market and home prices.
The top five states for risk increases are: South Dakota, Washington, Alaska, Vermont, and West Virginia. Less populated states are more volatile due to lower levels of lending activity. These states all had below-average index values in 2020.
Nevada took first place for the risk of fraud in mortgage loan applications, with New York, Hawaii, Florida and California rounding out the top five.
The CoreLogic Mortgage Fraud Report analyzes the collective level of fraud risk in loan applications encountered in the mortgage industry each quarter. CoreLogic develops index based on residential mortgage 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, occupation, property, transaction and undisclosed real estate debt.
To view CoreLogic’s full mortgage fraud report, visit www.corelogic.com/mortgagefraudreport.
Our comprehensive fraud risk analysis is based on a mortgage fraud consortium led by lenders and leading edge predictive scoring technology.
The CoreLogic Mortgage Application Fraud Risk Index represents the collective level of fraud risk the mortgage industry faces in each period, based on the share of loan applications with a high risk of fraud. The index is normalized to a benchmark of 100 for the share of high-risk loan applications nationwide in the third quarter of 2010.
Fraud type indicators are based on specific alerts from the CoreLogic LoanSafe fraud manager. These alerts are compiled consistently for all members of the CoreLogic Mortgage Fraud Consortium. Indicator levels are based on the prevalence and predictive capacity of relevant alerts. An increase in the indicator correlates with an increased risk of the corresponding type of fraud.
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CoreLogic is one of the world’s leading providers of real estate information, analytics and data-driven solutions. The company’s combined data from public, contributory and proprietary sources includes over 4.5 billion records spanning over 50 years, providing detailed coverage of property, mortgages and other charges, consumer credit, location, location, hazard risk and associated performance information. Markets served by CoreLogic include real estate and mortgage finance, insurance, capital markets and the public sector. CoreLogic delivers value to customers through unique data, analytics, workflow technology, advisory and managed services. Customers rely on CoreLogic to identify and manage growth opportunities, improve performance and mitigate risk. Headquartered in Irvine, California, CoreLogic operates in North America, Western Europe and Asia-Pacific. For more information, please visit www.corelogic.com.
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