The City With the Most Mortgage Fraud

Home prices have soared over the past two years as buyers have jumped into the market. One problem among people who apply for home loans is mortgage fraud, which varies widely from city to city.

Part of the reason home demand rose recently is low interest rates. A 30-year fixed rate mortgage carried a rate as low as 3% last year. That has changed considerably. The figure now sits at just above 5%.

The COVID-19 pandemic significantly increased the number of people who worked from home as offices were shuttered. Some have not opened, and people work from home 100% of the time. In other cases, businesses have hybrid work programs that allow people to split work between home and office.

The work from home movement allowed millions of people to relocate. Many left expensive coastal cities like New York and San Francisco, where home prices were more than twice the national average, to cities inland, where prices were much lower.

CoreLogic’s recently released Mortgage Fraud Brief covers fraud levels for the second quarter of this year, and it says, “The Mortgage Fraud Risk Index is calculated from the aggregation of individual loan application fraud risk scores during the previous quarter.” The places covered were the 100 largest core‑based statistical areas by population, and researchers picked the 15 with the highest fraud risk. Fraud data was based on mortgage application risk.

The average fraud risk across all markets carried a score of 121, down from 140 in the first quarter. The model that CoreLogic uses was changed between the two periods, which probably accounted for some of this change.

The city with the highest fraud risk by far was Miami. Its index of 293 was up by 24% from the first quarter.

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