Mortgage fraud risk declined in the third quarter even as property valuation fraud risk increased, according to a report released Feb. 3 by Interthinx.
The overall risk was down 9% on a year-over-year basis and 2% from the second quarter. Employment and income fraud risk also decreased modestly quarter-to-quarter, falling 5% in the third quarter.
Despite this favorable news, property valuation fraud risk was a mixed bag. While the real estate services firm noted a 5% decrease from the second quarter, property valuation fraud increased a staggering 20% from the same period in 2013. The report further noted that Florida remains a hotbed for this type of risk, with seven of the top ten metropolitan areas situated in the Sunshine State.
Affordability closely correlates with fraud risk, said Jeff Moyer, the president of Interthinx. He explained in areas where the typical buyer’s median income exceeds the monthly housing expense, deposits are stronger and consumer debts are lower, so there is less likelihood to misrepresent income and thus lower risk for fraud.
Interthinx, a subsidiary of First American Financial Corp., is headquartered in Agoura Hills, Calif.