Mortgage fraud on the rise amid rise in purchase loan share.

Mortgage Fraud On the Rise Amide Rise in Purchase Loan Share

According to a recently released CoreLogic Report, Mortgage Fraud Report, there was a 37.2 percent year-over-year increase in fraud risk at the end of the second quarter of 2021.

The 37.2 percent increase appears to be significant, measured from the lowest index point in Q2 2020, the lowest in Core Logic’s 11-year history. When the pandemic hit, and the refinancing boom ensued in Q2 2020, the index had dropped to 96 thanks to the increase of lowrisk rate/term refinances. The index seen is very, however, very similar to the levels seen in Q2 2019—which was 131. In the second quarter of 2021, about 1 in 120 mortgage applications had fraudulent activity, 0.83 percent of all mortgage applications. An increase from last year’s second quarter in which the estimate of applications with fraudulent activities was 0.64 percent, about 1 in 164 applications.

Like the previous year, investment properties had the highest risk applications for both purchases and refinance populations. To narrow it down further, investment purchase applications showed the highest risk, with 1 in every 23 applications having some fraudulent activities. As for purchase applications, their fraud risk jumped by 40 percent, while the risk for refinance applications

has increased by 19.4 percent.

The report suggested that continued low mortgage rates and a record volume of refinances made transactions less risky. There was, however, a turnaround in purchase loan fraud risk, which rose by 6 percent—the risk driven up by an increase of high-risk investment properties.

“Refinance opportunities that surged lending volumes during the pandemic may be winding down. The outlook is for fewer lowrisk refinances compared to purchases and cash-out refinances, which translates to a higher-risk environment for fraud,” says Ann Regan, executive, product management at CoreLogic.

According to the latest ICE Mortgage Technology’s Origination Insight Report (OIR), purchases made for most closings than refinances for the first time in 2019. The report revealed that purchases rose to 51 percent of closed loans in June, an increase from 47 percent in the month prior. On the other hand, refinances represented 48 percent of closed loans, down from 52 percent the previous month.

The CoreLogic report indicated that most frauds showed increased risk, with transactional risk showing an increase of 34.2 percent year-overyear. While most risks increased, income and property fraud risk decreased, however, slightly. The ICE Report indicated that occupancy fraud was an area to watch out for because of the GSEs limit on financing availability for nonprimary occupancy—something that would act as a motivation for occupancy misrepresentation.

Based on location, Nevada ranked the highest state susceptible to mortgage application fraud in Q2. California ranked second, followed by Hawaii and Florida, and finally New York. CORELOGIC is a leading global property information, analytics, and data-enabled solutions provider. The company uses combined data from public, contributory and proprietary sources to develop an index to analyze loan application fraud risk experienced in the mortgage industry.

Eric Lawrence Frazier is President and CEO of the Power Is Now Inc. The Power Is Now is a multimedia company specializing in real estate and mortgage education for consumers and real estate professionals on various topics in real estate, lending, economics, and government policy since September 1, 2009. The financial and real estate information is distributed through BlogTalkRadio, iTunes, TuneIn, and other online radio platforms nationwide, as well as online T.V. and eMagazines. Connect with Eric Frazier DRE 01143484 | NMLS 461807 | Office: 800-401-8994 x 703 | Direct: 714-361-2105 and start your real estate investment journey or homeownership in safe hands.

ABOUT THE POWER IS NOW MEDIA

The Power Is Now Media is an online multimedia company founded in 2009 by Eric L. Frazier, MBA, headquartered in Riverside, California. We advocate for homeownership, wealth building, and financial literacy for low to moderate-income and minority communities. The Power Is Now Media corporate office is located at 3739 6th Street Riverside, CA 92501. Ph: 800-401-8994 Website: www.thepowerisnow.com

Eric Lawrence Frazier, MBA. President and Founder, The Power Is Now Media

Work Cited

https://www.corelogic.com/insights/mortgage-fraudhttps://mortgageorb.com/mortgage-fraud-risk-increases-37-2-year-over-yearreports-corelogic https://www.mpamag.com/us/mortgage-industry/market-updates/report-revealssignificant-increase-in-mortgage-fraud-risk/314678 https://www.nationalmortgagenews.com/news/mortgage-fraud-risk-spikes-amidrise-in-purchase-loan-share