Mortgage Fraud Statistics

Fraud was found in 0.83 per cent of all mortgage applications, or about one out of every 120.

The highest-risk applications were for investment properties.

The 2018 Mortgage Fraud Report was released by CoreLogic, a major global provider of property information, analytics, and data-enabled solutions. According to the research, the CoreLogic Mortgage Application Fraud Risk Index showed a 37.2 per cent year-over-year increase in fraud risk at the end of the second quarter of 2021. The huge increase for mid-2021 comes after a significant decline in 2020, mostly due to a surge in normally low-risk refinances during the epidemic. The current degree of risk is similar to that of mid-2019.

“The refinancing options that swelled lending volumes during the pandemic may be dwindling.” In comparison to purchases and cash-out refinances, the prognosis is for fewer low-risk refinances, which means a larger chance of fraud.”

In the second quarter of 2021, an estimated 0.83 per cent of all mortgage applications, or around one in every 120, contained fraud. In the second quarter of 2020, the estimate was 0.61 per cent or around 1 out of every 164 applications. The total fraud risk has decreased due to reduced mortgage rates and a record volume of refinances. However, risk climbed by 6% in the purchase sector, with investment homes posing the most risk in both the purchase and refinance groups.

“The refinancing options that swelled lending volumes during the pandemic may be dwindling.” According to Ann Regan, executive, product management at CoreLogic, “the outlook is for fewer low-risk refinances relative to purchases and cash-out refinances, which translates to a higher-risk environment for fraud.”

The majority of fraud categories were at an increased risk on a national level. Year over year, transaction risk increased by 34.2 per cent. The risk of income and property fraud has decreased slightly, in line with the improving job market and rising home prices.

South Dakota, Washington, Alaska, Vermont, and West Virginia are the top five states for risk increases. Because the lending activity is lower in less-populated states, they are more variable. In 2020, all of these states had index values below the national average.

Nevada has risen to the top of the mortgage application fraud risk list, followed by New York, Hawaii, Florida, and California.

Each quarter, the CoreLogic Mortgage Fraud Report assesses the overall risk of loan application fraud in the mortgage market. CoreLogic creates the index using CoreLogic LoanSafe Fraud ManagerTM, a predictive scoring tool, to process residential mortgage loan applications. Identity, income, occupation, property, transaction, and concealed real estate debt are among the six fraud indicators listed in the report, supplementing the national index.

Methodology
Our complete fraud risk analysis is based on premier predictive-scoring technology and a lender-driven mortgage fraud consortium.
Based on the fraction of loan applications with a high risk of fraud, the CoreLogic Mortgage Application Fraud Risk Index shows the cumulative degree of fraud risk the mortgage sector is experiencing each month. The index is based on a nationwide average of 100 per cent of high-risk loan applications in the third quarter of 2010.

The Fraud Type Indicators were created based on specific CoreLogic LoanSafe Fraud Manager alerts. All members of the CoreLogic Mortgage Fraud Consortium receive the same warnings. The prevalence and predictive ability of the relevant alerts are used to determine indicator levels. An increase in the indicator corresponds to a higher probability of the related sort of fraud.

Only the primary recipient or the primary recipient’s publication or broadcast may utilize the data provided. Without prior written permission from CoreLogic, this data may not be resold, republished, or licensed to any other source, including publications and sources owned by the primary recipient’s parent firm. Any CoreLogic data, in whole or in part, utilized for publishing or broadcast must be attributed to CoreLogic, a data and analytics firm. The citation must be used in conjunction with the first reference to the broadcast or web material data. The CoreLogic logo must appear on screen or the website if the data is represented by maps, charts, graphs, or other visual elements.

Fraud Risk Exceeds Pre-Pandemic Levels, According to CoreLogic’s Annual Mortgage Fraud Report
CoreLogic, the industry standard for nationwide fraud monitoring and analysis, recently released its annual 2021 Mortgage Fraud Report. According to this year’s report, the CoreLogic Mortgage Application Fraud Risk Index showed a 37.2 per cent year-over-year increase in fraud risk at the end of the second quarter of 2021. The substantial increase comes after a significant decline in 2020, mostly caused by a surge in normally low-risk refinances during the epidemic. The current degree of risk is similar to that of mid-2019.

In the second quarter of 2020, an estimated 0.83 per cent of all mortgage applications contained fraud, or approximately 1 in 120 applications, up from 0.61 per cent, or about 1 in 164 applications, in the second quarter of 2020. Risk climbed by 6% in the buying segment, with investment homes posing the greatest risk in both the purchase and refinance groups.

“The refinancing options that swelled lending volumes during the pandemic may be dwindling.” According to Ann Regan, executive, product management at CoreLogic, “the outlook is for fewer low-risk refinances relative to purchases and cash-out refinances, which translates to a higher-risk environment for fraud.”

While the risk of most types of fraud increased nationally, the danger of income and property fraud fell slightly, which is consistent with the solid job market and rising housing prices.

Each quarter, CoreLogic’s Mortgage Fraud Report examines the overall degree of loan application fraud risk faced by the mortgage sector. 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, which is based on residential mortgage loan applications processed by predictive scoring technology CoreLogic LoanSafe Fraud Manager.

The segments and indices in the report have just been updated. CoreLogic introduced the new Fraud Risk Score Model 4.0 in 2019, including more granular segmentation to highlight the most important fraud risk variations between loan programs. This year, the company released a new generation of fraud indices to use this new methodology and improve volatility control.