The frequency of defects, fraud and misrepresentation submitted in mortgage loan applications in October increased by 1.3 percent compared with the previous month, according to the latest First American Loan Application Defect Index.
Year-over-year, the index decreased by 4.8 percent, and it was down 22.5 percent from the high point of risk in October 2013, First American said.
“While the overall risk of loan application defects, fraud and misrepresentation declined from a year-over-year perspective, there are regions with the potential for higher defect risk due to the impact from natural disasters – specifically, the communities impacted by recent wildfires in California,” First American Chief Economist Mark Fleming said in a release.
“The Camp Fire wildfire in Butte County, which has been named the deadliest U.S. wildfire in a century, and the Woolsey Fire in Los Angeles and Ventura counties, are some of the worse wildfires in the state’s history. In addition to the devastating impact on human life, the likely damage to housing is staggering.”
First American said the index for refinance transactions increased by 1.4 percent in October compared with previous month and was up 2.9 percent compared with a year ago. The index for purchase transactions increased by 2.5 percent in October compared with the previous month and was down 8.9 percent compared with a year ago.
According to the index, the five states with the greatest year-over-year increase in defect frequency in October were Alaska (+16.9 percent); Hawaii (+9.8 percent); California (+8.1 percent); Wyoming (+7.4 percent); and Maine (+6.9 percent).
The five states with the greatest year-over-year decrease in defect frequency during October were Vermont (-22.9 percent); Minnesota (-19.8 percent); Arkansas (-15.2 percent); Alabama (-14.7 percent); and Arizona (-14.3 percent).