Occupancy Fraud May Be the Next Risk for the Mortgage Industry

Elevated interest rates have had ripple effects across the U.S. property market. From the appearance of the lock-in effect, which has slowed down home purchases, to increasing questions of affordability, the climbing cost of taking out a mortgage has spurred many to consider how to lower the price tag.One trend that CoreLogic® has spotted in the property market is an increase in suspected occupancy fraud. In the 2023 Mortgage Fraud Report, researchers found that suspected occupancy loans have nearly tripled since 2020. This type of fraud, which is difficult to spot during origination, typically occurs when someone identifies an investment property as a primary residence to obtain more favorable rates.Despite this uptick in the subcategory, the overall instance of mortgage fraud has remained relatively flat. In the second quarter of 2023, CoreLogic estimates that 1 in 134 applications contained fraud, up from 1 in 131 during the same period in 2022.But occupancy fraud is not the only tactic on the table. In this episode, host Maiclaire Bolton Smith sits down with Bridget Berg, a senior leader in loan solutions at CoreLogic, to talk about the types of mortgage fraud, where it is most prevalent in the industry and why it can be so difficult to detect.In This Episode:2:19 – An overview of the prevalence of fraud through the years.3:56 – Host Maiclaire describes what it’s like to go through a routine audit following a mortgage, and guest Bridget Berg explains the different ways people can defraud lenders.5:56 – Is there more fraud happening now than in previous years? How did the pandemic change the trend?8:29 – Why should occupancy fraud should be top of mind for lenders?9:47 – Is mortgage fraud difficult to detect, and are there triggers and are there ways that lenders can identify risks?11:16 – Erika Stanley goes over the numbers in the property market in The Sip.12:33 – A discussion about the fraud risk associated with occupancy declarations and HELOC loans.Links:2023 Mortgage Fraud ReportOctober 2023 U.S. Home Price Insights ReportUp Next: HELOC Loans May Be the Next Threat for Mortgage FraudFind full episodes with all our guests in our podcast archive here: https://clgx.co/3zqhBZt

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