New data shows that cases of fraud among mortgage applicants is on the rise — an eye-raising trend as demand from borrowers remains relatively quiet.
The CoreLogic Mortgage Application Fraud Risk Index jumped by 8.3% year over year in the second quarter of 2024. This included a 1.1% increase from the prior quarter. The real estate data analysis firm noted that the index “has been slightly increasing to flat over the last year, which is expected given the minimal changes affecting the factors that typically drive changing risk in mortgage market.”
In Q2 2024, one in 123 of all mortgage applications (0.81%) contained an instance of fraud. Purchase loans (0.9%) had higher levels of risk than refinances (0.58%).
CoreLogic determined that the lowest-risk applications by loan type were those from the U.S. Department of Veterans Affairs (VA), which it called consistent with prior years.
When comparing transaction types, multiunit dwellings with two to four units were deemed riskier than single-family properties. One in 27 — or 3.5% — of applications involving multiunit dwellings contained fraud. The risk of fraud on purchase transactions of these types was up 5% compared to second-quarter 2023.
CoreLogic went on to note that of the six types of fraud it measures, identity fraud and transaction fraud were the categories that increased over the past year.
The risk factors for identity fraud increased have increased for two straight years — jumping by 5.5% in 2024 and by 12% in 2023. This trend, the company reported, is likely tied to a greater number of loan programs for foreign nationals who have Individual Tax Identification Numbers (ITIN) rather than Social Security numbers.
“Identity validation data for ITINs is not as mature as for SSN-based identities, so there is limited confirmatory information,” CoreLogic…