The risk of fraud in mortgage applications increased 1.6% in the second quarter compared with the first quarter but was down 3.1% compared with the second quarter of 2022, according to CoreLogic’s latest Mortgage Fraud Risk Report.
Nationally, the report estimates that 0.75% of mortgage applications, or one in 134, have indications of fraud as of the second quarter.
While this shows relative year-over-year stability for the overall index, there were some changes within the various segments: Identity fraud was up 12%, year-over-year, while occupancy risk fraud was up 11.8%, income fraud risk was up 6.2%, transaction fraud risk was up 1.9%, and property fraud risk was up 1.8%.
The exception continued to be undisclosed real estate debt, which was down 17.3%, an even more significant decrease than seen in 2022.
“Fraud risk levels have been holding steady since last year,” says Bridget Berg, senior leader, loan solutions for CoreLogic, in a release. “The industry continues to have a very high share of purchases compared to refinances, likely driven by rising interest rates.
“The current environment makes errors, delays and repurchases more costly,” Berg says. “Ultimately, these factors have spurred many lenders to enact more careful loan screening procedures. Top concerns voiced by clients include false income schemes, undisclosed debt and occupancy misrepresentation.”
New York and Florida have seen year-over-year decreases in mortgage fraud—down 6.23% and 1.08%, respectively—but remain the top two states for this risk.
They are followed by Connecticut, California and New Jersey. Rounding out the top ten are Washington, D.C., Massachusetts, Texas, Illinois and Maryland, with Maryland, Illinois and Massachusetts representing new additions to the top ten in 2023.
Photo: Aryan Dhiman