Refi Boom Drives Down Loan Defects – NMP Skip to main content

Refi Boom Drives Down Loan Defects

Aug 29, 2019
Photo credit: Getty Images/mareesw

The frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage loan applications decreased by five percent from June to July, according to the latest Loan Application Defect Index report from First American Financial Corp. Compared with July 2018, the Defect Index remained unchanged.
 
The Defect Index for purchase transactions decreased by 3.6 percent only a monthly measurement but was up 1.3 percent compared with one year ago. The Defect Index for refinance transactions decreased by 4.2 percent from June and was the at the same level as the July 2018 reading.
 
First American Chief Economist Mark Fleming predicted the defect risk could continue to decline thanks to increased refinancing activity.
 
“In fact, according to estimates, the number of existing households that would be refinance candidates would increase to 11.6 million at a mortgage rate of 3.5 percent–as the prevailing rate would be at least 0.75 percentage point lower than their current rate–compared with just 2.9 million households when the mortgage rate is 4.5 percent,” he said. “As the mortgage market composition continues to shift toward refinance transactions in 2019, the risk of defect, fraud and misrepresentation will continue to decline.”

 
About the author
Published
Aug 29, 2019
Trump Taps Former CFPB Deputy Brian Johnson To Lead Bureau

MBA backs the nomination as lenders await clarity on the future direction of consumer finance regulation under the Trump administration

Jun 12, 2026
Trump Names FHFA Director Bill Pulte Acting Director Of National Intelligence

FHFA director will continue overseeing Fannie Mae and Freddie Mac while serving as acting director of national intelligence

Jun 02, 2026
Realtor.com Launches AI Home Search Platform Built With Google

New RealAssist tool combines AI, affordability guidance and Google Maps data to engage buyers before they reach lenders

Jun 02, 2026
Another MLS Challenges Zillow In Fight Over Listing Visibility

Realtracs joins MRED in pushing back on Zillow's listing policies, a battle with potential implications for the broader homebuying and mortgage ecosystem

May 29, 2026
Gas Prices Are Quietly Reshaping Homebuyer Affordability

Rocket Money data suggests rising fuel costs are adding pressure to already payment-sensitive buyers as mortgage rates remain elevated

May 28, 2026
MISMO Targets Costly TRID Fee Cures With New Mortgage Fee Standardization Framework

MBA’s standards organization says inconsistent fee naming still drives costly redisclosures and rework, with fee-related cures affecting more than 30% of mortgage loans

May 27, 2026