Incidents of mortgage
application fraud identified in the second quarter were less likely to be
property related and more likely to be tied to income information than they
were the year before CoreLogic said today.
The company released its quarterly Mortgage Fraud Report showing overall
application fraud risk down, and fraud related to property information down by
one-fifth since the same quarter in 2012.
At the same time, application
fraud related to income and to debt both increased, especially the former.
Mark Fleming, chief economist
for CoreLogic, said, "As the housing market and economy have healed over
the last 18 months, a transition away from property-related to income-related
application fraud has occurred. Rising
prices and a healing housing market make property-related mortgage application
fraud less likely, but a higher level of scrutiny on an individuals' ability to
pay increases the propensity to attempt income-related fraud."
CoreLogic's analysis indicates
that about 19,700 mortgage applications filed in the second quarter had some
risk of fraud. This is a rate of 0.8
percent and is down from 20,900 applications or 0.7 percent a year
earlier. Little change was noted from the
first quarter of 2013. The dollar value
of applications identified as having a risk of fraud declined 5.6 percent from
the second quarter of 2012 to a total of 5.3 billion compared to $5.5 billion a
year earlier. Application fraud was up
slightly from $5.2 billion in the first quarter of 2013.
CoreLogic categorizes mortgage
application risk using six specific indexes; income, occupancy, employment,
identity, property and undisclosed debt.
Among these, intentional misrepresentation of income increased by 13.3
percent from the second quarter of 2012 and 7.5 percent from Q1. Property fraud risk, the deliberate over- or
under-valuing of a home, had a 7.1 decrease from the first quarter of 2013,
contributing to the 20.8 percent year-over-year decline.
Identity fraud occurs when an
applicant creates, alters, or steals an identity to obtain a mortgage. It also fell substantially, down 14.5 percent
and 3.2 percent from the previous year and quarter. Undisclosed debt increased by 2.1 percent on
an annual basis and 0.2 percent from the first quarter. Employment fraud, that is intentionally
misstating the name of an employer, position, or duration of employment, was
unchanged year-over-year but up 1.5 percent from the first quarter. Occupancy application fraud, misstating one's
intention to live in a property in order to obtain a benefit, increased 0.7
percent on an annual basis but was up 2.6 percent in a single quarter.
Fleming said that since the
beginning of 2012 application fraud risk has totaled more than $30 billion
nationally. "While the propensity toward
application fraud risk has declined based on our index, as the housing market
recovers, the volume of mortgage applications is rising and increasing the
total amount of fraudulent mortgage loan application dollars."
The dollar volume of fraudulent
mortgage applications decreased quarter-over-quarter in 27 states and increased in 13
states compared to a year earlier. Ohio
had the highest year-over-year growth in mortgage application fraud risk at
30.1 percent, followed by Hawaii (19.6 percent), Kentucky (16.6 percent),
Connecticut (15.0 percent) and Alaska (13.8 percent.)
Of the 75 Census Bureau areas
analyzed, Allentown-Bethlehem-Easton, Pa. had the highest year-over-year
increase in mortgage application fraud risk at 33.6 percent, followed by
Honolulu, Hawaii (27.4 percent), Greenville-Mauldin-Easley, S.C. (26.8
percent), Rochester, N.Y. (22.9 percent) and Bridgeport-Stamford-Norwalk, Conn.