CoreLogic released its latest Mortgage Fraud Report, showing a 7.5 percent year-over-year decrease in fraud risk at the end of the second quarter 2022, as measured by the CoreLogic Mortgage Application Fraud Risk Index. The decline in mid-2022 follows a large increase seen in the same period in 2021 and is partially due to the recalibration of CoreLogic’s scoring model in the first quarter of 2022, the company said. Since that update, higher risks were recorded during months in the second quarter, particularly for certain types of mortgage fraud.
In the second quarter of 2022, an estimated 0.76 percent of all mortgage applications contained fraud, about 1 in 131 applications. By comparison, in the second quarter of 2021, that estimate was 0.83 percent, or about 1 in 120 applications. Risks of income and property fraud posted the largest year-over-year increases in the second quarter, a respective 27.3 percent and 22.6 percent. CoreLogic said this trend is perhaps not surprising, considering that purchase loans now account for more mortgage transactions than refinances, and that the former are more susceptible to fraudulent activity.
The report noted that nationally, five of the six types of mortgage fraud types CoreLogic tracks showed increased risks since the second quarter of 2021. The exception was undisclosed real estate debt, which declined by 12 percent.
Additionally, the report found the top five states for fraud risks increases to be Rhode Island, South Dakota, Kentucky, New York and Nebraska. It noted that less-populous states are prone to volatile index values because small groups of higher-risk loans are more likely to move the index. It provided the example of Rhode Island, whose 60 percent year-over-year fraud risk increase was in part due to a large share of government-backed loans. These loans have become riskier over the past year.
It also noted that New York moved into the top position for mortgage application fraud risk. Florida, Rhode Island, Nevada and Connecticut rounded out the top five.