Why is it important to select a highly reputable mortgage broker in Florida? According to CoreLogics’s 2018 Mortgage Fraud Report, Florida ranks 3rd in the U.S. for risk of mortgage application fraud.
What Is Mortgage Application Fraud?
According to the FBI, mortgage application fraud accounts for more than half of the mortgage fraud cases that are reported and investigated annually. Mortgage application fraud is when the borrower misrepresents any of their information or includes misleading information in the application. This can be anything from failing to list existing debts, lying about income, claiming employment at the wrong institution, or falsely stating who will occupy the home after the sale.
Factors Affecting Mortgage Fraud Risk
Fraud can be triggered by many circumstances, but CoreLogic found that certain factors seem to have a more direct impact on mortgage application fraud. These include:
#1 Shifting from a Refinancing Housing Market into a Purchasing Market
When homebuyers are purchasing new homes rather than refinancing their existing homes, there tends to be higher risk of mortgage application fraud. This is because home purchasers tend to have more to gain through fraud than refinancers. This is a trend that exists in many large metro areas in the United States.
#2 Increase in Wholesale Mortgage Loans
As the number of wholesale mortgages increase, mortgage application fraud risk also tends to increase. Wholesale mortgages tend to lead to more mortgage application fraud than retail or correspondent mortgages. In the U.S., wholesale mortgages are increasing in frequency and taking more of the total share of home mortgages. In Q2 of 2018, wholesale mortgage loans accounted for around 8.5% of mortgage loans, compared to 4.5% in Q2 of 2016.
Mortgage Application Fraud Increasing Nationally
The CoreLogic report shows that mortgage application fraud is increasing throughout the United States. From Q2 in 2017 to Q2 in 2018, the percentage of mortgage applications containing fraud increased from 1 in 122 to 1 in 109 (0.82% to 0.92%). Income fraud risk increased more than any other type of mortgage application fraud risk, going up by 22.1%, while undisclosed real estate debt fraud decreased by 11.4%.
Mortgage application fraud risk is also growing alongside increasing home values and purchases. CoreLogic’s 2018 report shows areas like Tampa Bay increasing in risk with current trends set to continue. The implications of increasing mortgage application fraud risk are unclear, though mortgage companies may begin to respond with more risk prevention measures or policies in the future.
Top States for Mortgage Application Fraud Risk
Florida was the 3rd highest ranked state for risk of mortgage application fraud. It held the same position last year and maintained it with a 7% increase in risk over last year’s numbers.
The top states in terms of mortgages application risk were New York at the top and New Jersey in the 2nd position. DC, New Mexico, Illinois, Georgia, Nevada, California, and Oklahoma made up the 4th – 10th places. Oklahoma is the newest addition to the top 10. They surpassed Louisiana after their correspondent mortgages risk increased 28% from 2017.
Florida’s Mortgage Application Fraud Risk
In Florida, 5 metros ranked in the top 10 for mortgage application fraud risks:
- Ranked #1: Miami-Fort Lauderdale-West Palm Beach, FL.
- Ranked #5: Lakeland-Winter Haven, FL.
- Ranked #8: Tampa-St. Petersburg-Clearwater, FL.
- Ranked #10: Deltona-Daytona Beach-Ormond Beach, FL.
- Ranked #11: Orlando-Kissimmee-Sanford, FL.
Tampa Bay ranked #8 in the U.S. for mortgage application fraud risk, with an index rating of 212. This followed a year-over-year increase of 5% from 2017. As the Tampa Bay area continues to grow and more people relocate to the city, it can be expected that mortgage application fraud risk may continue to increase.
Elsewhere in Florida, the Miami-Fort Lauderdale-West Palm Beach metro was ranked highest for mortgage application fraud risk, with an index rating of 288. The Lakeland/Winter Haven metro was ranked 5th with an index rating of 229, and the Deltona/Daytona Beach/Ormond Beach metro was ranked 10th highest an index rating of 201. Together, 4 metros in Florida were included in the top 10 riskiest U.S. metros for mortgage application fraud. And, the Orlando/Kissimmee/Sanford metro ranked #11.
Marimark Mortgage is ranked a Top 3 Mortgage Broker in Tampa, Florida, and serves the mortgage needs of homebuyers, homeowners, and real estate investors in Florida, Pennsylvania, and Virginia.
We specialize in conventional home mortgages, FHA, VA, and USDA mortgage options, refinance loans, and reverse mortgages. We’ve worked extensively with cash-out refinancing and help clients to lower their monthly mortgage payments.