Loan Defect Level Remains Steady

Aug 31, 2017

The frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage applications increased by 7.4 percent from November 2018 to December 2018

The frequency of defects, fraudulence and misrepresented information submitted in mortgage applications remained the same in July as compared with June and was 20 percent lower than one year earlier, according to the Loan Defect Index from First American Financial Corp.

The Defect Index for refinance transactions increased 1.4 percent month-over-month and is 20.3 percent higher than a year ago, while the Defect Index for purchase transactions remained the same from June to July and is up 15.2 percent compared to a year ago.

“Finally, after seven consecutive months of increasing defect, fraud, and misrepresentation risk, no change compared to last month is welcome news,” said Mark Fleming, Chief Economist at First American. “In particular, purchase transactions, which are inherently more at risk of defects, fraud and misrepresentation, showed no increase compared to a month ago. One month doesn’t establish a trend, so it will be important to see if we’ve reached a turning point in the long-run trend of increasing defect risk.”

About the author

Phil Hall

Link copied

Published

Aug 31, 2017

Operations

MBA Expands CONVERGENCE With New Knowledge Hub For Lenders

iEmergent-powered dashboard gives mortgage professionals local market insights on demographics, affordability, and homeownership trends

The Mortgage Bankers Association's (MBA) CONVERGENCE initiative has expanded with the launch of the CONVERGENCE Knowledge Hub, a new online resource designed to help lenders, nonprofit organizations, housing counselors, real estate professionals, and community leaders expand...

People On The Move

Click n' Close Appoints Merv Govender As Chief Information Officer

Veteran technology executive brings nearly three decades of leadership in banking, gaming, and healthcare to oversee AI, cybersecurity, and technology strategy

Click n' Close has appointed Merv Govender as its new chief information officer, adding a technology executive with nearly three decades of experience leading digital transformation initiatives across banking, gaming, and healthcare.In his new role, Govender will oversee the...

Jul

New Orleans, LA

More from

Industry News

President Trump Cancels 21st Century ROAD To Housing Act

Trump cancels signing the bipartisan housing bill, leaving affordability package in limbo

Industry News

Jun 24, 2026

Commercial, Multifamily Mortgage Debt Tops $5 Trillion In Q1

MBA says outstanding debt grew by $26.3 billion in the first quarter, led by multifamily lending and increased holdings from banks, agencies, and life insurers

Industry News

Jun 18, 2026

Fed Holds Rates Steady, But Outlook Dims For Mortgage Rate Relief

The Federal Reserve left rates unchanged but updated projections show more policymakers expecting additional hikes

Industry News

Jun 18, 2026

Congress Nears Final Vote On 21st Century ROAD to Housing Act

Senate voted 87-8 to advance House-amended package, with final votes expected in coming days

Industry News

Jun 17, 2026

Florida Pending Sales Signal Strong Summer Housing Market

Closed sales rise for a ninth straight month as inventory gives buyers more negotiating power