The frequency of defects, fraud and misrepresentation submitted in mortgage loan applications in May decreased by 5.5 percent compared with the previous month, according to the latest First American Loan Application Defect Index.
First American said the May 2019 index was up 7.5 percent from one year ago, but down 15.7 percent from the high point of risk in October 2013.
“Last month, we predicted that if mortgage rates continued to fall, it may help ease the pressure on fraud risk,” First American Chief Economist Mark Fleming said in a release. “Indeed, the 30-year, fixed-rate mortgage fell to its lowest level since January 2018, and fraud risk has fallen alongside it.”
According to the index, defects in refinance applications submitted in May decreased by 7.2 percent compared with previous month, and is up 8.5 percent compared with a year ago. Defects in purchase applications submitted in May decreased by 6.3 percent compared with the previous month, and were up 8.4 percent compared with a year ago.
The five states with the greatest year-over-year increases in defect frequency in May were Nebraska (+39.1 percent); Hawaii (+30.1 percent); Iowa (+29.9 percent); New York (+27.6 percent); and Pennsylvania (+23.4 percent), First American found.
The five states with the greatest year-over-year decreases in defect frequency in May were Arkansas (-9.7 percent); Vermont (-4.8 percent); Florida (-3.3 percent); Utah (-2.3 percent); and Arizona (-1.3 percent).