Mortgage fraud risk rises in third quarter from decade low
The increased share of purchase requisitions in the third quarter – after the refinancing wave that peaked in the second – has increased the risk of fraud in mortgage applications, according to CoreLogic.
The mortgage fraud risk index rose 2.4% to 99 in the third quarter, from a revised 96 in the second, its lowest point in a decade. However, it is still down 15% from 116 year-on-year. This is only the fourth time the index has fallen below 110. CoreLogic set a benchmark score of 100 when it created the metric in Q3 2010.
The risk index rose along with the growing share of requisitions in the third quarter compared to the second. As the boom in refinancing record interest rates gave way to buyers – especially newbies – this resulted in a comparatively increased risk of fraud for purchase requisitions.
“The buying segments have consistently shown small increases in risk, while the refinancing segments have maintained their risk levels compared to the previous quarter,” said Bridget Berg, head of fraud solutions at CoreLogic, in a statement. at NMN. “We expect to see fraud risk levels increase in the future as refinancing volumes decline and purchases account for a larger portion of transactions.”
Among the 100 most populous US real estate markets, the Poughkeepsie-Newburgh-Middletown, NY area took the top spot with a fraud index of 219, a 15% jump from the second quarter.
McAllen-Edinberg-Mission, Texas, posed the second highest risk with 165. McAllen, in particular, continues to pose a risk of fraud due to a high share of foreclosed properties. The Las Vegas-Henderson-Paradise, Nevada metropolitan area came in third with 163. In addition to the risk of mortgage fraud, Las Vegas faces increased risks of declining home values in 2021, as the coronavirus has particularly affected affected its economy.
Miami-Fort Lauderdale-West Palm Beach and Cape Coral-Fort Myers, Fla. Round out the top five with scores of 157 and 144, respectively. Florida remains a magnet for mortgage fraud, as eight of the 15 most risky markets reside in the state.