Mortgage application fraud risk in 2Q at lowest in a decade

The increase in refinance transactions coupled with a decline in investment property purchases reduced mortgage application fraud risk during the second quarter to levels last seen a decade ago, according to CoreLogic.

Its Mortgage Application Fraud Risk Index was 102 for the second quarter, down 8.7% from 112 in the first quarter and 22.6% from one year ago, when the index was 132.

CoreLogic created the index in the third quarter of 2010, which had a value of 100. Since then, the index had been below 110 on three occasions: the first and second quarters of 2015 and the third quarter of 2016.

"We continue to see slightly increased risk in conventional purchases and much greater risk in the investment purchase segment this quarter, but the lower risks in refinances and high refinance volumes keep the national index low," CoreLogic said in its report. "While investment purchases have been increasing in risk, they have been decreasing in relative volume. Many lenders are tightening credit parameters due to the uncertain economy."

That is reflected in the share of investment purchase applications, which was at 0.9% for the quarter, the lowest since CoreLogic created the index.

Florida remains a hot bed of mortgage application fraud risk. Of the 15 metropolitan areas with the highest index values, eight are in Florida. The Miami-Fort Lauderdale-West Palm Beach area still leads the nation with the highest index value at 196, down 10% from the first quarter's 216.

Las Vegas is second, with a 2% rise in fraud risk from the first quarter, while Orlando, Fla., is third, down 5% and New York is fourth, down 11%.

The Daytona Beach, Fla., area had a 21% drop in fraud risk, which placed it fifth on the list, compared with second in the first quarter.

Springfield, Mass., had the largest increase in fraud risk, 37%, ranking it ninth for the quarter, with an index value of 152, up from 111 in the first quarter.