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CoreLogic: Mortgage Fraud Down 4% in Florida — but Still High

The U.S. saw an 11.4% decrease in mortgage fraud. By metros, South Florida continues to be the top U.S. hotspot for fraud, and six Florida cities are in the top-25 list.

ORLANDO, Fla. – CoreLogic released its latest Mortgage Fraud Report, which finds an overall 11.4% year-over-year decrease in fraud risk as measured by the CoreLogic Mortgage Application Fraud Risk Index – the first decrease since the third quarter of 2016.

In Florida, fraud risk dropped 4% year-to-year, according to the report. However, the state moved up one notch to No. 2 after the risk in New Jersey fell 21%. No. 1 New York remained at the top after its mortgage fraud risk grew 8%.

CoreLogic’s analysis of the top 25 U.S. metros for fraud risk found South Florida – Miami-Fort Lauderdale-West Palm Beach– as No. 1, with a 7% increase year-to-year. However, six Florida metros made the top 25:

1. Miami-Fort Lauderdale-West Palm Beach (309 on the CoreLogic Index)

5. Deltona-Daytona Beach-Ormond Beach (210)

6. Tampa-St. Petersburg-Clearwater (197)

9. Orlando-Kissimmee-Sanford (167)

12. Cape Coral-Fort Myers (163)

15. Jacksonville (157)

The analysis found that during the second quarter of 2019, an estimated one in 123 mortgage applications (0.81% of all applications) contained indications of fraud, compared with the reported one in 109 (0.91%) in the second quarter of 2018.

The CoreLogic Mortgage Fraud Report analyzes the collective level of loan application fraud risk experienced in the mortgage industry each quarter based on all residential mortgage loan applications processed by CoreLogic LoanSafe Fraud Manager. It considers six types of fraud: identity, income, occupancy, property, transaction and undisclosed real estate debt.

“The decrease in fraud risk mid-2019 appears temporary, based on unexpected interest rate drops and the resulting influx of low-risk refinance transactions,” says Bridget Berg, principal of Fraud Solutions Strategy for CoreLogic. “The absolute number of risky loans has not decreased but are simply part of a larger mortgage market at this time.”

Report highlights

  • For the first time since 2017, Florida outpaced New Jersey and moved into the second highest position.
  • Eight of the top 10 riskiest states showed stable or decreasing risk over the past year.
  • States with the greatest year-over-year risk growth: Idaho, Alabama, Mississippi, New York and Delaware.
  • States with the largest risk decreases: Kansas, Missouri, Massachusetts, Illinois and New Mexico.
  • Jumbo loans for home purchases is the only segment showing a risk increase.
  • Nationally, all fraud types showed decreased risk. Undisclosed Real Estate Debt fraud risk had the greatest decrease year over year, followed by decreases in Property and Income fraud types.
  • iBuyers – companies that use technology to instantly make an offer on a home – accounted for more than 1% of all home sales in 2018 and are a contributing factor in the overall decline of fraud risk.

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