Bad data on residential loan applications was a little less likely in September, though risk was worse by a fifth compared to last year. Risk jumped in hurricane-affected areas.
At 83 as of September, the U.S.
Loan Applications Defect Index was reduced over a percent versus one month earlier.
The decline indicates that the
frequency of defects, fraud and misrepresentation for information submitted in mortgage loan applications has subsided.
First American Financial Corp. reported the index, which stands 19 percent lower than the October 2013 high.
But despite the month-over-month improvement, conditions have deteriorated since the same month last year, with risk rising more than 20 percent.
September 2017’s index for purchase transactions was down over
a percent from August but up 13 percent from September 2016.
Refinance risk, meanwhile, didn’t change month-to-month but has worsened 19 percent on a year-over-year basis.
Risk was highest in Arkansas, where the index was 106. Close behind was 102 in both Montana and North Dakota, then 101 in Idaho and 98 in Mississippi.
At 66, New Hampshire had the lowest index.
First American Chief Economist Mark Fleming explained in the report a rise in defect risk that historically follows a natural disaster is taking place in Florida and Texas — especially Houston where there was a more than 7 percent surge.
“Unfortunately, historical data indicates that natural disasters and loan application defect risk go hand-in-hand,” Fleming said.
