California Real Estate Fraud Report

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28
Mar

Fraud on the Rise in 2017 Mortgage Applications

Fraud and misrepresentation in mortgage applications (mortgage fraud) is on the increase again, according to new data from First American’s Loan Application Defect Index.

The overall Index reveals that the frequency of defects, fraud and misrepresentation in mortgage applications was up 4.1% from January to February in 2017. It was also up 1.3% the same month in 2016. The peak was in October 2013.

Split apart, the Defect Index for (new) purchase transactions was up 2.4% for both month over month and year over year and the refinance defect index grew 3.4% month over month in February, but decreased 6.4% from February of 2016.

Mark Fleming, the chief economist at First American, believes that the recent Fed interest-rate hike, which caused lenders to raise their rates, sent a signal to prospective buyers, some of whom may have submitted loan applications with false or fraudulent information.

“Defect, fraud and misrepresentation risk continues to respond to the shift in market composition. Rising mortgage rates continue to increase the share of higher risk purchase loan applications, but they are also incenting more borrowers to apply for ARMs,” Fleming said. “The savings for the consumer can be significant, but ARM loan applications have historically had higher defect, misrepresentation and fraud risk,” said Fleming. “The increasing popularity of adjustable rate mortgages is something to keep an eye on as the spring home buying season warms up.”

Read the original article in  Mortgage Professional America.

© Copyright 2007-2017 Monique Bryher

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The information and notices contained on The California Real Estate Fraud Report are intended to summarize recent developments in real estate fraud, mortgage fraud, short sale fraud, REO fraud, appraisal fraud, loan modification scams, loan modification fraud and other real estate related crimes occurring in Los Angeles and California. The posts on this site are presented as general research and information and are expressly not intended, and should not be regarded, as legal advice. Much of the information on this site concerns allegations made in civil lawsuits and in criminal indictments. All persons are presumed innocent until convicted of a crime. Readers who have particular questions about real estate fraud, mortgage fraud and appraisal fraud matters or who believe they require legal counsel should seek the advice of an attorney.

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