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Mortgage Applicants Lying Less about Property, More about Income

by devteam September 25th, 2013 | Share

Incidents of mortgagernapplication fraud identified in the second quarter were less likely to bernproperty related and more likely to be tied to income information than theyrnwere the year before CoreLogic said today. rnThe company released its quarterly Mortgage Fraud Report showing overallrnapplication fraud risk down, and fraud related to property information down byrnone-fifth since the same quarter in 2012. rn At the same time, applicationrnfraud related to income and to debt both increased, especially the former.  </p

Mark Fleming, chief economistrnfor CoreLogic, said, “As the housing market and economy have healed overrnthe last 18 months, a transition away from property-related to income-relatedrnapplication fraud has occurred.  Risingrnprices and a healing housing market make property-related mortgage applicationrnfraud less likely, but a higher level of scrutiny on an individuals’ ability tornpay increases the propensity to attempt income-related fraud.”</p

CoreLogic’s analysis indicatesrnthat about 19,700 mortgage applications filed in the second quarter had somernrisk of fraud.  This is a rate of 0.8rnpercent and is down from 20,900 applications or 0.7 percent a yearrnearlier.  Little change was noted from thernfirst quarter of 2013.  The dollar valuernof applications identified as having a risk of fraud declined 5.6 percent fromrnthe second quarter of 2012 to a total of 5.3 billion compared to $5.5 billion arnyear earlier.  Application fraud was uprnslightly from $5.2 billion in the first quarter of 2013.  </p

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CoreLogic categorizes mortgagernapplication risk using six specific indexes; income, occupancy, employment,rnidentity, property and undisclosed debt. rnAmong these, intentional misrepresentation of income increased by 13.3rnpercent from the second quarter of 2012 and 7.5 percent from Q1.  Property fraud risk, the deliberate over- orrnunder-valuing of a home, had a 7.1 decrease from the first quarter of 2013,rncontributing to the 20.8 percent year-over-year decline.  </p

Identity fraud occurs when anrnapplicant creates, alters, or steals an identity to obtain a mortgage.  It also fell substantially, down 14.5 percentrnand 3.2 percent from the previous year and quarter.  Undisclosed debt increased by 2.1 percent onrnan annual basis and 0.2 percent from the first quarter.  Employment fraud, that is intentionallyrnmisstating the name of an employer, position, or duration of employment, wasrnunchanged year-over-year but up 1.5 percent from the first quarter.  Occupancy application fraud, misstating one’srnintention to live in a property in order to obtain a benefit, increased 0.7rnpercent on an annual basis but was up 2.6 percent in a single quarter. </p

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Fleming said that since thernbeginning of 2012 application fraud risk has totaled more than $30 billionrnnationally.  “While the propensity towardrnapplication fraud risk has declined based on our index, as the housing marketrnrecovers, the volume of mortgage applications is rising and increasing therntotal amount of fraudulent mortgage loan application dollars.”</p

The dollar volume of fraudulentrnmortgage applications decreased quarter-over-quarter in 27 states and increased in 13rnstates compared to a year earlier.  Ohiornhad the highest year-over-year growth in mortgage application fraud risk atrn30.1 percent, followed by Hawaii (19.6 percent), Kentucky (16.6 percent),rnConnecticut (15.0 percent) and Alaska (13.8 percent.)</p

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Of the 75 Census Bureau areasrnanalyzed, Allentown-Bethlehem-Easton, Pa. had the highest year-over-yearrnincrease in mortgage application fraud risk at 33.6 percent, followed byrnHonolulu, Hawaii (27.4 percent), Greenville-Mauldin-Easley, S.C. (26.8rnpercent), Rochester, N.Y. (22.9 percent) and Bridgeport-Stamford-Norwalk, Conn.rn(22.5 percent). See Table 2.

All Content Copyright © 2003 – 2009 Brown House Media, Inc. All Rights Reserved.nReproduction in any form without permission of MortgageNewsDaily.com is prohibited.

About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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