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Economic Center Blog

Why The Ability-to-Repay Rules Are Like A Steering Wheel Lock

By Mark Fleming on May 30, 2018

In January of 2013, the mortgage industry witnessed the birth of a new income-underwriting era. The Consumer Finance Protection Bureau (CFPB) published new requirements for mortgage lenders to carefully assess a consumer’s ability to repay their mortgage loan. The new standards were dubbed the “ability-to-repay” rules and were set to take effect one year later in January 2014. 

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Topics: Fraud, Loan Application Defect Index, income

What Drives Loan Application Defect Risk At The Local Level?

By Mark Fleming on April 27, 2018

A common adage about real estate is that it’s local. The dynamics of one housing market can be very different from another depending on the local economy and access to natural amenities, like mountains or water. The levels of loan application defect, fraud and misrepresentation risk vary greatly based on local conditions as well. In fact, substantial differences exist among the 100 markets that we track with the Loan Application Defect Index. For example, the riskiest market this month, Little Rock, Ark., is almost twice as risky as the safest market, Rochester, NY.

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Topics: Interest Rates, Loan Application Defect Index, mortgage rates

Will The Return Of ARMs Lead To Surging Loan App Defect Risk?

By Mark Fleming on March 29, 2018

It’s been a long time coming – a rising rate environment. The 30-year, fixed-rate mortgage has been below 4.5 percent since late 2013 and is now finally moving consistently higher. According to the consensus of economic forecasts, it is likely to approach 5 percent by the end of this year. This matters for defect, fraud and misrepresentation risk as rising mortgage rates reduce the benefit of refinancing and increase the share of purchase loan transactions in the market. As we have noted before, purchase loan transactions are riskier than refinance transactions.

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Topics: Interest Rates, Loan Application Defect Index, mortgage rates

Does High Rise = High Risk?

By Mark Fleming on February 28, 2018

First American’s proprietary Loan Application Defect Index examines January 2018 data on the frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage loan applications.

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Topics: Loan Application Defect Index

Do Rising Rates Mean Rising Defect Risk?

By FirstAm Editor on February 1, 2018

We’ve posted the December First American Loan Application Defect Index, which estimates the frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage loan applications. The Defect Index remains the same as compared with the previous month, and increased 20.3 percent as compared with December 2016. The Defect Index is down 18.6 percent from the high point of risk in October 2013.

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Topics: Loan Application Defect Index

Where Is Defect Risk ‘Naughty’ Or ‘Nice’?

By FirstAm Editor on December 28, 2017

We’ve posted the November First American Loan Application Defect Index, which estimates the frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage loan applications. The Defect Index remains the same as compared with the previous month, and increased 22.1 percent as compared with November 2016. The Defect Index is down 18.6 percent from the high point of risk in October 2013.

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Topics: Loan Application Defect Index

Loan Defect Risk Stabilizes Nationally, But Surges In Florida And Texas

By FirstAm Editor on November 30, 2017

We’ve posted the October First American Loan Application Defect Index, which estimates the frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage loan applications. The Defect Index remains the same as compared with the previous month, and increased 22.1 percent as compared with October 2016. The Defect Index is down 18.6 percent from the high point of risk in October 2013.

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Topics: Loan Application Defect Index

Will Post-Disaster Mortgage Fraud Risk Trends Play Out In Florida And Texas?

By FirstAm Editor on October 31, 2017

We’ve posted the September First American Loan Application Defect Index, which estimates the frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage loan applications. The Defect Index decreased 1.2 percent as compared with the previous month, and increased 20.3 percent as compared to September 2016. The Defect Index is down 18.6 percent from the high point of risk in October 2013.

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Topics: Loan Application Defect Index

What Is Elevating Identity- And Collateral-Based Fraud Risk?

By FirstAm Editor on September 29, 2017

We’ve posted the August First American Loan Application Defect Index, which estimates the frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage loan applications. The Defect Index remained the same in August 2017 as compared with the previous month, and increased 20.0 percent as compared to August 2016. The Defect Index is down 17.6 percent from the high point of risk in October 2013.

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Topics: Loan Application Defect Index

Will The Fed’s Actions In September Increase Loan Defect Risk?

By FirstAm Editor on August 31, 2017

We’ve posted the July First American Loan Application Defect Index, which estimates the frequency of defects, fraudulence and misrepresentation in the information submitted in mortgage loan applications. The Defect Index remained the same in July 2017 as compared with the previous month, and increased 20.0 percent as compared to July 2016. The Defect Index is down 17.6 percent from the high point of risk in October 2013.

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Topics: Loan Application Defect Index