The good news: The risk of mortgage application fraud is declining in almost every state. The bad news: The result of such fraud in the second quarter of this year totaled an estimated $5.3 billion nationally.
A report from CoreLogic estimates that application fraud risk dropped by 5.6 percent year-over-year during the second quarter. Approximately 0.8 percent, or 19,700 mortgage applications, were identified as having a high risk of fraud in the second quarter.
Risk is measured through analysis of income, occupancy, employment, identity, property and undisclosed debt. Of these, misrepresentation of income showed the biggest year-over-year increase in the second quarter. Property risk, or deliberate over- or under-valuing of a home to show gains, showed the greatest decrease during that time.
Not the usual suspects
Among the states, Ohio showed the highest year-over-year growth in mortgage application fraud risk, rising by 30.1 percent during the second quarter. It was followed by Hawaii, with a 19.6 percent rise in fraud, then Kentucky (16.6 percent increase), Connecticut (15 percent) and Alaska (13.8 percent).
The state with the highest estimated value of fraudulent mortgage applications was the one where real estate values are sky-high: California, at $864 million. It was followed by other states with soaring home values -- New York at $278 million in estimated fraud and Florida at $273 million.
While the risk of fraud has been declining over the past few quarters, Mark Fleming, chief economist for CoreLogic, said in a statement that he expects to see an increase. "As the housing market recovers, the volume of mortgage applications is rising and increasing the total amount of fraudulent mortgage loan application dollars."
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