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CoreLogic's Mortgage Fraud Report revealed there was a 26.3% year-over-year decrease in fraud risk at the end of the second quarter of 2020. According to the report, this marks the second consecutive year of substantial decreases in risk.
As of the second quarter of this year, an estimated one in 164 mortgage applications or 0.6% of all applications contained indications of fraud. In 2019, the risk was slightly higher as an estimated one in 123 mortgages, or 0.8% of applications contained indications of fraud.
While mortgage fraud risk was down in Q2 for 2020, the report stated that risk in the purchase segment jumped by 6%. Investment properties drove this increase in both purchase and refinance applications.
"The large drop in fraud risk in the past year was primarily driven by record-high refinancing, which is traditionally lower risk transactions," said Bridget Berg, principal of fraud solutions strategy for CoreLogic. "However, we still see elevated levels of risk in purchase transactions, and we have not yet seen the long-term impacts of the COVID-19 pandemic, so it’s imperative risk managers remain vigilant in searching out potential fraud."
The three states with the largest amount of mortgage application fraud risk include New York, Nevada and Florida.