For several months in a row now, the risk of home loan applications having bad or bogus data has been on the rise. Issues tied to robust real estate sales might be a factor.
The frequency that information submitted in residential loan application has defects, fraudulence and misrepresentation was 4 percent greater last month than in February 2017.
That is according to the Loan Application Defect Index March 2017. The index reflects estimated mortgage loan defect rates over time.
The same rate of increase in the risk of application fraud was made versus March of last year.
First American Financial Corp. reported the index Friday.
First American Chief Economist Mark Fleming said it was the fourth month in a row that risk rose.
“After four consecutive months of increased defect risk, it’s fair to call this a trend,” Fleming stated.
Application risk for refinances worsened by more than 3 percent from February 2017. Refinance risk increased 5 percent from March 2016.
Risk on loan applications to finance a home purchase was up more than 2 percent on a month-over-month basis and nearly 4 percent on a year-over-year basis.
“We are experiencing one of the strongest sellers’ markets in recent memory and the ‘speed-buying’ that is required for home buyers to make an offer and win a bid for homes they like may be contributing to the increase in defect, misrepresentation and fraud risk that we are observing,” Fleming said.
Over the past year, overall risk has risen 42 percent in Wyoming, the most of any state. Next was South Dakota’s 38 percent, then North Dakota’s 36 percent,
Mississippi’s 29 percent and West Virginia’s 27 percent.
A 9 percent retreat in risk in Connecticut was the biggest decline of any state.
