The frequency of defects, fraudulence and misrepresentation in mortgage applications during April increased 2.5 percent from March and spiked by eight percent from April 2016, according to the First American Loan Application Defect Index
The Defect Index for purchase transactions in April was up 2.3 percent compared to March and rose by 7.2 percent compared to a year earlier. The Defect Index for refinance transactions increased by 4.8 percent month-over-month and was 3.1 percent higher year-over-year.
“The Loan Application Defect Index continued its strong upward increase for the fifth consecutive month,” said Mark Fleming, chief economist at First American. “The pace of defect risk growth is as strong as we have seen since the index began in 2011, adding to the concern over the five-month trend. While we have recently noted that part of the rise in overall risk is due to the market’s shift toward riskier purchase transactions, the fact that risk in refinance transactions is also on the rise underscores the need for caution.”