As mortgage rates continue to descend, loan application defects and fraud risk are following suit. According to First American's June 2016 Loan Application Defect Index, misrepresentations in loan applications dipped 1.4 percent in June compared with the previous month. Annually, these fraudulent trends decreased 12.2 percent. The Defect Index, an estimation of mortgage loan fraud risk trends by geography and type of loan, has fallen 5.3 percent over the past three months to a rating of 72 in June and is down 29.4 percent from the highest point of risk in October 2013, according to First American. The financial corporation says overall decline in the Defect Index is a product of modernization and improvements of systems and standards mitigating risk. The Defect Index increased the most in Maine, climbing 14 percent year-over-year. North Dakota, Missouri, Montana and Alaska rounded out the top five. Michigan saw the highest annual decrease in defect frequency. The stat...
- In the U.S., mortgage fraud dipped 1.4 percent over May and 12.2 percent over the same month in the previous year in June.
- The top five markets for the Defect Index were located in South Carolina and Texas, with Houston receiving a Defect Index of 89.
- Michigan, Florida and Deleware ranked as the top three states with the biggest decrease in mortgage fraud risk.