Mortgage application fraud risk plummeted in the second quarter as refinance loans poured into the market, according to CoreLogic.
The risk of fraud on a mortgage application declined 11.4% year-over-year in 2Q19, marking the first decline since the third quarter of 2016, according to CoreLogic’s Mortgage Application Fraud Risk Index.
The analysis found that during the second quarter of 2019, an estimated one in 123 mortgage applications, or 0.81% of all applications, contained indications of fraud, compared with the reported one in 109, or 0.91% in the second quarter of 2018.
The report analyzes the collective level of loan application fraud risk experienced in the mortgage industry each quarter. 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.
“The decrease in fraud risk mid-2019 appears temporary, based on unexpected interest rate drops and the resulting influx of low-risk refinance transactions,” said Bridget Berg, principal of Fraud Solutions Strategy for CoreLogic. “The absolute number of risky loans has not decreased but are simply part of a larger mortgage market at this time.”