CoreLogic reports cooling in mortgage fraud risk in San Francisco

  • California cities held six spots on the top 25 list for mortgage fraud.
  • In San Francisco, year-over-year fraud risk decreased 17.2 percent.
  • As has been the case for the past five years, jumbo mortgages have exhibited the highest fraud risk, followed by low-down payment mortgages.

The premier event for luxury agents and brokers
Luxury Connect | Oct. 16-18 | Beverly Hills

In the newest issue of CoreLogic’s Mortgage Fraud Report, released in mid-October, fraud risk year-over-year dropped an overall 8.9 percent at of the end of the second quarter of 2015. In San Francisco, year-over-year fraud risk decreased 17.2 percent. That’s a decent showing and about the middle of the pack percentage-wise for cities in the top 25 that have seen fraud decreases.

About 12,814 mortgage applications made nationwide, or 0.67 percent of all mortgage applications, contained hints of fraud. In the second quarter of 2014, 0.69 percent of mortgage applications, or 11,100, involved some element of fraud. For the 12 months ending the second quarter 2015, the total value of mortgage applications with an element of fraud or serious misrepresentations was $17.3 billion. Last year, that number was $19.8 billion.

California cities held six spots on the top 25 list for mortgage fraud. San Francisco’s decline of 17.2 percent year-over-year is clouded by the finding that quarter-to-quarter fraud likelihood grew by 9.5 percent from Q1 2015 to Q2 2015.

As has been the case for the past five years, jumbo mortgages have exhibited the highest fraud risk, followed by low-down payment mortgages. With an average home in the San Francisco metro selling for well north of $400,000, it’s easy to see how fraud in these categories might crop up.

CoreLogic’s researchers credit new regulations and greater scrutiny on creditworthiness as factors in rooting out fraud.

The CoreLogic Mortgage Application Fraud Risk Index uses a predictive fraud-scoring technology to scrutinize loans. The company’s LoanSafe Fraud Manager, provides the data for a national index that is composed of six sub-indices that gauge different types of mortgage application fraud: employment, identity, income, occupancy, property and undisclosed mortgage debt.

Of the six components in the index, only undisclosed mortgage debt risk increased this time around. That risk rate rose 1.7 percent. The largest year-over-year decline was recorded in fraudulent identity risk, at 22.7 percent.

The report also showed that the top 10 states for risk remained largely the same, with Rhode Island falling out of the top 10 and being replaced by D.C., at sixth place. 

Email Kimberley Sirk.