econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 27 December 2015

2016 Could Reach Highest Mortgage Fraud Risk In USA Housing Market Since Crisis

from CoreLogic

-- this post authored by Bret Fortenberry

Industry professionals agree that mortgage origination fraud activity peaked between 2005 and 2008, period that offered unprecedented opportunities to manipulate the system, contributing to the boom and following bust. Through increased regulation, better controls and tighter lending guidelines, we have experienced a strong reversal, with very low fraud rates in the last several years.

As we look to 2016, it is likely that loosening credit guidelines and a recovering purchase market will increase the opportunities and motivation for origination fraud, such as inflated sales prices to cover down payment misrepresentation.

CoreLogic has been tracking mortgage fraud risk since the third quarter of 2010. During that time, mortgage fraud risk has shown an oscillating trend with an average increasing slope. Based on current analysis, we expect the trend to continue to follow this oscillation pattern and believe we are on the bottom cusp of the next period. If the mortgage fraud risk continues this trend, it could peak around the second quarter of 2016, reaching the highest fraud risk since 2010.

The five-year national mortgage fraud index is shown in Figure 1. The green line represents the national fraud index and the purple line shows a predictive oscillation path the index has been following. The last peak in the mortgage fraud index occurred in the first quarter of 2014 with a decreasing trend until the first quarter of 2015. The index leveled off and then started to climb in the third quarter of 2015. The increase can be attributed to an improving job market and continuing low mortgage interest rates.

Additionally, the increase in mortgage fraud risk is shifting from historically risky markets to lower-risk markets. During 2014, the national fraud risk index decreased overall. However, certain regions, such as Florida and New York/New Jersey, continued to increase in risk. These regions have now stabilized at a high-risk level, and join Las Vegas, Los Angeles and Chicago (which have been high risk since early 2014). We are beginning to see regions that had relatively low fraud risk increase.

CoreLogic produced two heat maps for the largest 100 Core Based Statistical Areas (CBSAs)1 based on population. The first map is a snapshot of current fraud risk for Q3 2015 and the second map shows the year-over-year change in risk. In the first map, you can see that the highest fraud risk is concentrated in several CBSAs in Florida and the New York/New Jersey regions. Las Vegas shows just slightly less risk than those areas. The second map reveals that the top five growing regions are: Wichita, Kan., Dayton, Ohio, Syracuse, N.Y., Akron, Ohio, and Springfield, Mass. surprisingly, none of these areas are currently ranked in the top 30 percent for fraud risk among large CBSAs.

Fraud is on the rise. The highest risk areas are staying stable but remain high so the growth in fraud risk is attributed to previously lower-risk areas. CoreLogic expects mortgage fraud risk to increase over the next year, with the impact of the increase spreading into currently less risky regions across the nation. Table 2 categorizes the CBSAs that currently have or could potentially have the highest fraud risk in the nation. The first column shows the CBSAs that have historically high mortgage fraud risk and currently have the highest fraud risk. These regions should be noted when the fraud risk is both high and low nationally. The second column contains medium-risk CBSAs that had a large increase in fraud over the past year. We expect that these CBSAs will continue to grow and may become part of the top ten riskiest CBSAs. Ventura, Calif. and New Haven, Conn. have moved up in the ranks and are now just slightly below Los Angeles and Chicago. If they continue to increase, these metro areas will move into the top ten riskiest CBSAs. The third column contains CBSAs that are currently lower in risk, but have experienced large increases in the past year. If this trend continues for another year, these CBSAs will enter the top twenty riskiest CBSAs.

Two-thirds of the U.S. population lives in the top 100 CBSAs, but there is still fraud risk outside of these areas. CoreLogic has found a correlation between rapidly growing CBSAs and increasing mortgage fraud risk. North Dakota is an interesting example of a lower-risk region that is experiencing a rise in fraud risk. The recent oil boom has brought new businesses and population migration to Williston N.D., the fastest growing micropolitan area in the state. This is contributing to the state's rapid increase in occupancy fraud and income fraud risk, 175 percent and 550 percent year over year, respectively.

This blog is based on analysis of loan-application fraud risk the mortgage industry is experiencing as measured quarterly by the CoreLogic Mortgage Application Fraud Risk Index, which is based on residential mortgage loan applications processed by CoreLogic LoanSafe Fraud Manager™.

[1] Population is based on 2014 US Census Bureau data.

© 2015 CoreLogic, Inc. All rights reserved.

Source

http://www.corelogic.com/blog/authors/bret-fortenberry/2015/12/2016-could-reach-highest-fraud-risk-since-crisis.aspx

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.




Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Men Without Work
Slow Economic Growth Will Be Around For A Long Time
News Blog
Early Headlines: Asia Stocks Mixed, Dollar, Oil Up, Gold Down, Article 50 Day, Westinghouse Files Ch. 11, Trump Wants $1B To Start Wall, Russian Protests, China's $8T Shaky Debt, And More
Thirty Plus Terror Suspects And Convicts Not A Rare Occurrence In UK
The Winners And Losers In Trump's Proposed Budget
God and America (Version 3)
Corning's Glass Brimming With Taxpayer Subsidies
Who Americans Consider Their Greatest Enemies
Has The IPad Become A Sideshow Act?
Terrorism In Westminster: London Had Expected Attack For Some Time And Police Reaction Was Rapid
Are Smartphones Killing Digital Cameras
What We Read Today 28 March 2017
NASA Precise Landing Technologies Tested On Vertical Testbed Rocket
March 2017 Conference Board Consumer Confidence Highest Since 2000
Richmond Fed Manufacturing Survey Again Improves In March 2017.
Investing Blog
Investing.com Technical Summary 28 March 2017
The Dollar's Coming Impact On Markets
Opinion Blog
Free Immigration Is The Moderate, Common-Sense Position
Macron May Lead But Le Pen Remains The Big Story
Precious Metals Blog
These Gold Stocks Will Produce Much Bigger Gains Than Gold Itself
Live Markets
28Mar2017 Market Close: US Stocks Posted Gains, DOW Closed Up 150 Points, Crude And US Dollar Steady
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government































 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved