Mortgage fraud risk is up across the country, according to the CoreLogic National Mortgage Application Fraud Risk Index (FRI) for Q1 2017. The FRI is a measure of loan-application level fraud risk in the mortgage industry, based on residential mortgage loan applications processed by CoreLogic Loan Safe Fraud Manager.
The index jumped 8 percent in Q1, up to 132 from 113 a year ago and 122 last quarter. CoreLogic notes that although this is the highest level for the Index since Q3 2010, at that time post-crisis controls against mortgage application fraud were tight. The CoreLogic Mortgage Fraud Consortium grew from 50 percent to 60 percent of application s between Q4 2016 and Q1 2017.
Of the 100 highest populated Core Based Statistical Areas (CBSA) covered by the index, Youngstown-Warren-Boardman, Ohio-Pennsylvania saw the largest increase in the index, going from an index of 90 to 272 (a 202 percent increase). CoreLogic notes that the previous quarter saw a similar growth in Syracuse, New York, where the Index jumped from 63 to 193.
CoreLogic notes that the index movement in the Ohio-Pennsylvania CBSA is primarily driven by an increase in non-local investment loans. The ability to purchase relatively inexpensive rental properties in this area is drawing interest from investors in other states with less affordable rental opportunities.
Florida, where home prices are rising and inventory is dropping dramatically, currently holds the highest fraud risk rank of CoreLogic’s 100 CBSAs. The CBSA of Miami-Fort Lauderdale-West Palm Beach, Florida is currently 274, up five percent from Q4 2016’s 261.
Deltona-Daytona Beach-Ormond Beach, Florida posted a 10 percent decline in mortgage fraud risk, but is still one of the highest fraud risk metros, ranking at number eight. Syracruse, New York saw a 7 percent drop after its previous increase, and now sits at an index level of 180.