Interthinx 2014 Data Reveals "New Normal" for Mortgage Fraud Risk
Overall decrease tied to market stabilization with fraud factors concentrated more locally, shows Interthinx® 2014 annual Mortgage Fraud Risk Report
June 25, 2015, Agoura Hills, Calif.,
Interthinx, Inc., a subsidiary of First American Financial Corporation (NYSE: FAF) and a leading provider of comprehensive risk mitigation solutions for the financial services industry, has released its annual interactive Mortgage Fraud Risk Report, which includes data collected in 2014 from loan applications processed by the Interthinx FraudGUARD® system.
According to the report, the 2014 Annual Mortgage Fraud Risk Index value is 100, a 4 percent decrease from 2013 that signals a halt in the gradually rising trend observed in the previous four years. Of the four type-specific fraud risk indices Interthinx tracks—Property Valuation, Identity, Occupancy and Employment/ Income—only Property Valuation Risk increased (by 17 percent). Other noteworthy observations include:
- Overall, mortgage fraud risk has appeared to normalize;
- Less overall real estate market volatility with stabilization of real estate prices and inventory across the nation;
- Geographic distribution of fraud risk continues to become even more dispersed in 2014, shifting from entire states towards regional, MSA, and ZIP code level concentrations;
- Property valuation and occupancy fraud risk are main drivers of risk among top 10 riskiest states;
- With the exception of California, the riskiest states exhibit a corresponding weak housing market;
- Better Housing Price Index (HPI) values and overall market health in states where investor activity is evident;
- Fraud risk does not appear to trend downward as credit scores increase.
"After three years of increasing fraud risk, the 2014 data show both an overall decrease and a shift to more localized concentrations of specific fraud types," said Jeff Moyer, chief product and strategy officer at First American Mortgage Solutions. "In no way diminishing the imperative for lenders, servicers and investors to remain vigilant, overall market stabilization does allow our industry to focus on more highly targeted strategies to address specific fraud threats."
"Taking pre-emptive action against fraud, and the losses related to fraud, is critically important to protect mortgage lenders and consumers," said Mark Fleming, chief economist at First American. "As real estate and mortgage markets continue to move toward the new, post-crisis normal, fraud remains a concern that is ever-changing and requires detection methodologies that account for a variety of risk types. Rising property fraud prevalence is not surprising given the economic conditions and rising prices we see today."
The full report is available at www.mortgagefraudriskreport.com.
The Mortgage Fraud Risk Report is created by an internal team of fraud experts in order to provide deeper insight into current fraud trends through the analysis of millions of loan applications collected from the Interthinx FraudGUARD® loan-level fraud-detection tool. The 2014 report marks the fifth year that Interthinx has released this information offering.
For more information about Interthinx and its Mortgage Fraud Risk Report, visit http://www.Interthinx.com.
About the Mortgage Fraud Risk Report
The Mortgage Fraud Risk Report is an Interthinx information offering created by an internal team of fraud experts. This is the fifth Interthinx year-end report. The report provides deeper insight into current fraud trends through the analysis of millions of loan applications amassed from the industry’s use of the Interthinx FraudGUARD® loan-level fraud detection tool. The Fraud Risk indices are influenced by many factors including house price indices, concentrations of defaulted and foreclosed properties, market demand and supply, employment rates, collusion by parties to loan transactions, regulation, and changing consumer patterns. By analyzing the data in the Mortgage Fraud Risk Report, it is possible to reach conclusions linked to the overall market experience and gain actionable intelligence to empower risk mitigation in real time.
For more information about Interthinx and its Mortgage Fraud Risk Report, please visit http://www.Interthinx.com.
Interthinx, Inc., a subsidiary of First American Financial Corporation (NYSE: FAF), provides essential solutions to mitigate risk in the mortgage lending marketplace. Interthinx offers capabilities in mortgage fraud and verification, property valuation, compliance, quality control and loss mitigation that are used by the nation's top financial institutions. Interthinx helps its clients minimize risk, increase operational efficiencies, satisfy regulator demands, manage data verification and remain compliant. For more information, visit www.interthinx.com or call 1-800-333-4510.
About First American
First American Financial Corporation (NYSE: FAF) is a leading provider of title insurance, settlement services and risk solutions for real estate transactions that traces its heritage back to 1889. First American also provides title plant management services; title and other real property records and images; valuation products and services; home warranty products; property and casualty insurance; and banking, trust and investment advisory services. With revenues of $4.7 billion in 2014, the company offers its products and services directly and through its agents throughout the United States and abroad. More information about the company can be found at www.firstam.com.