MN’s Mortgage Market Sees Fewer Fraudulent Applications

Of the 25 largest U.S. metro areas, the Twin Cities experienced one of the largest year-over-year declines in fraud risk among mortgage applications during the most recent quarter.

While the number of mortgage loan applications is rising as the housing market recovers, the propensity toward fraud on mortgage applications is decreasing, according to a recent report from CoreLogic.
CoreLogic—an Irvine, California-based provider of property information, analytics, and real estate and mortgage finance services—developed its report to determine the level of fraud risk the mortgage industry faces as well as the share of loan applications that contain a high risk of fraud. 
The study takes into account six categories in which fraud can occur: employment, identity, income, occupancy, property, and undisclosed debt. Examples of application fraud include the deliberate misrepresentation of income as well as the misrepresentation of an applicant’s intention to live on the property in order to obtain incentives such as a lower down payment or lower risk rate.
CoreLogic uses predictive-analytics technology to determine the risk of fraud when processing residential mortgage loan applications. In addition to its own proprietary data, CoreLogic uses data from the Home Mortgage Disclosure Act (which includes public loan information.
The Twin Cities specifically experienced a 14.5 percent year-over-year decline in fraud risk among mortgage applications during this year’s second quarter—compared with a 5.6 percent decline nationally—according to the report.
In fact, the Minneapolis-St.Paul-Bloomington metro area was listed as having the sixth-highest rate of decline among the 25 largest U.S. metro areas.
In addition to having a 14.5 percent year-over-year decline in fraud risk among mortgage applications, the Twin Cities saw a 6.6 percent quarterly decline. According to CoreLogic, fraudulent residential mortgage applications totaled an estimated $52.4 million in the Twin Cities area—a 0.5 percent decrease from the same period last year.
Nationally, CoreLogic estimated that mortgage application fraud risk totaled $5.3 billion in the second quarter of 2013—a 3.8 percent decrease from the same period last year.
Among the 25 largest metro areas, the Phoenix-Mesa-Glendale, Arizona, area had the highest rate of decline in fraud risk among mortgage applications with 33.1 percent. The Riverside-San Bernardino-Ontario, California, area came in second with a 19.8 percent decline, and the Washington, D.C.-Arlington-Alexandria, Virginia, area was third with a decline of 16.9 percent.
Earlier this month, CoreLogic released a study indicating that the Minnesota housing market is faring better than the national housing market as 12.6 percent of homes across the state were in “negative equity” territory in the first half of 2013 compared with 14.5 percent of homes nationally.
CoreLogic specializes in data, analytics, workflow technology, advisory, and managed services. The company serves clients in the real estate, mortgage finance, insurance, capital markets, transportation, and government industries and operates in seven countries. It reported $1.6 billion in operating revenue for the 2012 fiscal year—a 17.1 percent increase from the prior year.
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