Q1 Mortgage Fraud Risk Up 8%; Youngstown, Ohio Rises Most

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The national mortgage application fraud risk index rose from 122 in the fourth quarter of 2016 to 132 in the first quarter of 2017, according to researchers at CoreLogic, a sequential increase of 8.2%. The index score was 113 in the first quarter of 2016.

The share of purchase loans in the index rose from 50% to 60% sequentially.

CoreLogic’s mortgage fraud risk index is standardized to a baseline of 100 for the share of high-risk loan applications nationally in the third quarter of 2010. Each one-point change in the index represents a 1% change in the share of mortgage applications having a high risk of fraud.

The 10 metro areas with the highest mortgage fraud risk and their index scores are:

  1. Miami-Fort Lauderdale-West Palm Beach, Florida: 274, up 13 points sequentially
  2. Youngstown-Warren-Boardman, Ohio/Pennsylvania: 272, up 182 points
  3. New York-Newark-Jersey City, New York/New Jersey: 225, up 10 points
  4. Tampa-St. Petersburg-Clearwater, Florida: 215, up 3 points
  5. Lakeland-Winter Haven, Florida: 215, up 30 points
  6. Las Vegas-Henderson-Paradise, Nevada: 202, up 26 points
  7. Oxnard-Thousand Oaks-Ventura, California: 202, up 47 points
  8. Deltona-Daytona Beach-Ormond, Florida: 196, down 21 points
  9. Los Angeles-Long Beach-Anaheim, California: 186, up 15 points
  10. Syracuse, New York: 180, down 13 points

The huge increase in the index score for the Youngstown metro area was primarily driven by an increase in non-local investment loans. CoreLogic noted:

The ability to purchase relatively inexpensive rental properties in this area is drawing interest from investors in other states with less affordable rental opportunities. Note that smaller [metro areas] are more susceptible to larger index fluctuations than the National Index so we will monitor to see if this trend sustains.

In CoreLogic’s most recent report on mortgage fraud, published last September, more than 12,800 mortgage applications (0.7%) in the 12 months through June 2016 contained fraudulent information.