Increasing Fraud Types
Of the six fraud types we measure for trends, Identity fraud and Transaction fraud were the types with an increase over the prior year.
Identity
Identity fraud risk indicators have increased for two straight years. Consortium members report identity fraud in the industry infrequently, and its rarity is mirrored in the Fannie Mae fraud trend reporting. This increase is likely due to the rise in ITIN (Individual Tax Identification Numbers) loan programs for people who do not have Social Security Numbers. Identity validation data for ITINs is not as mature as for SSN-based identities, so there is limited confirmatory information.
↑5.5% ↑12%
THIS YEAR LAST YEAR
Transaction
Transaction fraud risk indicators increased again this year after increasing last year. These increases were tied to upticks in rapid resales with rising prices, more high-activity buyers, and sales transactions with multiple high-risk flags. Elements of the transaction, such as down payment, property use, or non-arms-length relationships, are more likely to be misrepresented.
↑4.9% ↑1.9%
THIS YEAR LAST YEAR
Top Five Riskiest States for Fraud
1. New York
New York’s top position is influenced by high concentrations of several loan segments that have above-average risk, including 2- to 4-unit loans, FHA purchases, and investment purchases
2. Florida
Florida shows increased risk in FHA purchases in the last 2 years, with the overall state risk increasing 10.2% in the last year.
3. California
California had the largest overall risk increase of 14.6%, nearly double the national increase rate. The increase was distributed across loan segments.
4. Connecticut
Connecticut’s risk levels are due to investment loans, both purchase and refinance, which are at higher risk levels and in higher volumes than national averages. Overall risk was up 10.8%.
5. New Jersey
New Jersey had the smallest increase of the top 5, at 4.3%. Its risk level is impacted by higher-risk 2—to 4-unit purchases and refinances.
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Identity and Transaction fraud types showed the greatest risk increases.
THIS YEAR
LAST YEAR
Identity fraud risk indicators have increased for two straight years; 5.6% this year and 12% last year. Identity fraud in the industry is reported infrequently by consortium members and its rarity is mirrored in the Fannie Mae fraud trend reporting. It is likely that the increase in ITIN (Individual Tax Identification Numbers) loan programs for people who do not have Social Security Numbers is causing this increase. Identity validation data for ITINs is not as mature as it is for SSN-based identities, so there is limited confirmatory information.
1 in 123
Mortgage applications estimated to have indications of fraud in Q2 2024
1 in 111 Purchase applications
1 in 171 Refinance applications
Mortgage Application Fraud Risk Index
Q2 2024
compared to
Q2 2023
The CoreLogic Mortgage Application Fraud Risk Index increased 8.3% nationally year-over-year and increased by 1.1% since last quarter. The Index has been slightly increasing to flat over the last year, which is expected given the minimal changes affecting the factors that typically drive changing risk in mortgage market.
In the Second Quarter of 2024
1 in 123
APPLICATIONS
0.81% of all mortgage applications contained fraud.
The lowest-risk applications are VA-backed programs, which is consistent with prior years.
1 in 27
TRANSACTIONS
The 2—to 4-unit segment showed the highest risk, with purchases increasing in risk by about 5% year over year, while the 2—to 4-unit refinance risk was flat.
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