Mortgage Fraud Risk Falls 8.9%, Worst in Florida

By Paul Ausick Updated Apr 28, 2:03AM EDT · Published Oct 28, 12:10PM EDT

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An estimated 12,184 mortgage applications filed in the second quarter of 2015 contained fraudulent information or serious misrepresentations, according to data released on Wednesday by CoreLogic. The total represents 0.67% of all mortgage applications and is up from 11,100 applications (0.69%) in the second quarter of 2014. Year over year, CoreLogic’s fraud risk index has declined 8.9%.

The index evaluates six information components on a mortgage application: employment, identity, income, occupancy, property and undisclosed debt. The only risk category to show a year-over-year gain was undisclosed debt, up 1.7%. The other five risks slipped anywhere from 7% to nearly 23%.

The five states with the highest fraud risk are Florida, New York, Hawaii, New Jersey and Nevada.

The highest year-over-year growth in application fraud risk was noted in Louisiana, up 17.1% compared with the second quarter a year ago. The states rounding out the top five are the District of Columbia (9.1%), Hawaii (7.6%), Delaware (7.6%) and Pennsylvania (7.5%).

An executive at CoreLogic said:

Although overall fraud trends are stable to decreasing for most of the country, some geographies warrant scrutiny. One such area is the Miami CBSA [Core-based Statistical Area], which ranks atop the CoreLogic fraud list of metropolitan areas. Of particular concern is that house prices in Miami appear to be overheated, as indicated by the CoreLogic Market Condition indicators. Moreover, house prices in the Miami CBSA have been accelerating at a far greater pace than have rents for single family homes, suggesting that prices may not be a good indictor of sustainable value. This combination of risk facts makes areas like Miami worth paying attention to.

Employment application-fraud risk, where a borrower misrepresents employment information, dropped 7%. Lying about income fell 7.3% year over year and identity fraud risk fell 22.7%. Fraud risk fell 7.4% for property fraud, where a borrower intentionally misrepresents the market value of the property. Fraud risk fell 17.1% year over year on occupancy fraud, where borrowers misrepresent their intentions to occupy the mortgaged property.

The five states with the largest year-over-year declines in application fraud risk are Kansas (down 32.5%), Indiana (down 28.1%), Nebraska (down 27.3%), Connecticut (down 25.5%) and Nevada (down 21.7%).

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The five metropolitan areas with the highest year-over-year growth in application fraud risk are:

Tulsa, Okla., up 54.1%

McAllen-Edinburg-Mission, Texas, up 44.6%

Urban Honolulu, Hawaii, up 35.8%

Cleveland-Elyria, Ohio, up 32.8%

Knoxville, Tenn., up 23.3%

The five metro areas with the largest year-over-year declines are:

Bridgeport-Stamford-Norwalk, Conn., down 40.5%

Hartford-West Hartford-East Hartford, Conn., down 32.2%

Oklahoma City, Okla., down 32.1%

Charlotte-Concord- Gastonia, N.C., down 29.6%

Memphis, Tenn.-Miss.-Ark., down 29.4%

About the Author Paul Ausick →

Paul Ausick has been writing for a673b.bigscoots-temp.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.

He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.