Housing

Q4 Mortgage Fraud Risk Up 13%; Risk Greatest in Florida

Paul Ausick

Published: January 20, 2017 9:10 am

Last Updated: January 12, 2020 3:42 pm

The national mortgage application fraud risk index rose from 108 in the third quarter of 2016 to 122 in the fourth quarter, according to researchers at CoreLogic, a sequential increase of 13%. The second quarter’s index score was 113.

The most significant fourth-quarter increase came in purchase loans where the loan-to-value ratio was 80% or less. The share of purchase loans in the index rose from 48% to 50% sequentially.

CoreLogic’s mortgage fraud risk index is standardized to a baseline of 100 for the share of high-risk loan applications nationally in the third quarter of 2010. Each one-point change in the index represents a 1% change in the share of mortgage applications having a high risk of fraud.

The 10 metro areas with the highest mortgage fraud risk are:

1. Miami-Fort Lauderdale-West Palm Beach, Florida: 261
2. Deltona-Daytona Beach-Ormond, Florida: 217
3. New York-Newark-Jersey City, NY/NJ: 215
4. Tampa-St. Petersburg-Clearwater, Florida: 212
5. Syracuse, New York: 193
6. El Paso, Texas: 190
7. Lakeland-Winter Haven, Florida: 185
8. Jacksonville, Florida: 179
9. Memphis, Tennessee: 178
10. Las Vegas-Henderson-Paradise, Nevada: 160

Mortgage fraud can take many forms. The basic motive behind most of the borrower-initiated fraud is an attempt to qualify for a mortgage that would otherwise be unavailable. Inflating an appraisal in an attempt to get a mortgage for more than a property is worth or claiming income or assets that a borrower does not have are just two examples.

Borrowers themselves may also be the target of scams seeking to defraud them with loan modification programs or even Ponzi schemes. Promises to rescue a borrower from a foreclosure can leave a beleaguered homeowner in even worse financial shape.

The CoreLogic Mortgage Fraud Report analyzes the collective level of loan application fraud risk the mortgage industry is experiencing each quarter. CoreLogic develops the index based on residential mortgage loan applications processed by CoreLogic LoanSafe Fraud Manager, a predictive scoring technology. The report includes detailed data for six fraud type indicators that complement the national index: identity, income, occupancy, property, transaction, and undisclosed real estate debt.