Overall fraud risk increased by almost 17% year-over year, and is now at its highest level since CoreLogic created the index in 2010. Keep in mind, however, that in historical terms, fraud, overall, is still relatively low, given the tighter underwriting since the mortgage crisis, and the amount of rate and term refis over the past few years. But there’s no question which direction fraud risk is moving. In 2017, although application volumes were lower, the total number of applications with fraud is higher than last year, in fact, CoreLogic estimated more than 13,000 applications with indications of fraud in the second quarter alone. In 2016, CoreLogic estimated an application fraud rate of 70 basis points, which is 1 in every 143 loan applications. This year, that rate increased to 82 basis points, or 1 in every 122 loan applications. As for the types of mortgage fraud that are on the rise:
– Occupancy fraud risk, which includes both traditional occupancy risk as well as reverse occupancy risk, is up by 7%.
– Transaction fraud risk, which covers straw buyers and falsified down payments, is up almost 4%.
– Income fraud risk increased 3.5%, with most of the increase happening in the first half of this year.
When it comes to fraud, the top three states are New York, New Jersey, and Florida. Both New York and New Jersey saw an increase in risk in the last year, while Florida, which has been high on the list for a while, had a decrease in risk. The states showing the greatest growth rate in fraud are lower-risk states in the middle of the country – namely Iowa, Indiana, and Missouri. The two main drivers of why fraud risk increased this past year are: First, a continued increase in purchase transaction share – from 55% of applications to 66% over the last year. And second, more originations coming through wholesale channels. Wholesale, or brokered, loans have historically exhibited higher risks of fraud. The increase in wholesale activity is affecting the overall national fraud risk.
If these trends continue, it is likely fraud risk will continue to rise. As CoreLogic looks to the coming year, cash-out refinances and home equity loans are being monitored. With rising home prices and homeowner equity gains, they are likely to become more popular. The fraud risk on these products is higher than it is on rate and term refinances, so this is another area to watch over time.
Oil prices steady after OPEC signals possible deal extension
Oil prices stabilized on Monday after one of the most bearish weeks in months, propped up by OPEC comments signaling the possibility of continued action to restore market balance in the long term. Oil production platforms in the Gulf of Mexico started returning to service after Hurricane Nate forced the shutdown of more than 90% of crude output in the area. The prospective restarts kept price gains in check. Former hurricane Nate has become a post-tropical cyclone that continues to pack heavy rain and gusty winds, the US National Hurricane Center (NHC) said on Monday. “Quiet market overall this morning though (refined) products are weaker as it looks like Nate was a non-event for refining,” said Scott Shelton, broker at ICAP in Durham, North Carolina. “I think that without the support of products and Brent, the market may get dragged lower in the near term as its apparent that the market doesn’t care much about OPEC already jawboning about an extension of the deal.” The Organization of the Petroleum Exporting Countries is due to meet in Vienna on Nov. 30, when it will discuss its pact to reduce output in order to prop up the market. OPEC Secretary-General Mohammad Barkindo said on Sunday that consultations were under way for an extension of the agreement beyond March 2018 and that more oil-producing nations may join the pact, possibly at the November meeting. He also said OPEC members and other producers may have to take some “extraordinary measures” to ensure the market is in balance in the long term.
New York City delinquencies show record rise in Q3 2017
New York City first-start foreclosures are up a record 79% year-over-year, with all five boroughs posting increases. Still, they are down from Q2 2017 by 6%, according to an October report by Property Shark. As stated in the report, “The number of first-time foreclosures in NYC surged 79% year-over-year in Q3 2017 – 859 homes were scheduled, compared to 481 in Q3 2016. After a peak in foreclosure activity in Q2 2017, with 911 new foreclosures scheduled across all 5 boroughs, Q3 2017 brought a slight slowdown in the number of cases. This translates into a 6% decrease quarter-over-quarter, following a trend we’ve noticed when tracking foreclosure data as Q3 is usually slower than Q2. By property type, single- and two-family homes have seen the highest increases in Q3 2017.” Staten Island, the Bronx, and Brooklyn recorded the number of foreclosed homes scheduled for auction “skyrocket” year-over-year. Manhattan was relatively unchanged, while Queens showed only a “moderate” increase of 27%. The Bronx and Brooklyn had the greatest contribution to the overall increase of the New York City foreclosure numbers. In Q3 of 2016, the Bronx posted 101 first-time foreclosures, while Brooklyn posted 94. In Q3 of 2017, however, those numbers rose to 247 and 205, respectively.
Narrowing the boroughs down further, the Bronx’s foreclosure levels recently spiked. Quoting Property Shark’s report:“A record-high number of homes were scheduled for auction in Q3 2017, representing a 145% increase compared to Q3 2016. The number of cases in the Bronx kept relatively at the same levels for the past quarters with a spike in Q2 2016 but otherwise hovering around 100 homes per quarter or even lower than that. Back in the second quarter, the Bronx was the only borough that recorded a decrease in foreclosure activity. The situation changed drastically in Q3 2017 when 247 homes were scheduled for the first time.” For reference, 88 foreclosure starts occurred in the first quarter of 2017. That number rose to 118 in Q2, and finally to 247 in Q3. Brooklyn also experienced a year-over-year increase in foreclosure starts at 118%, even though that number is down 22% from the previous quarter. “The first three quarters of 2017 were particularly harsh for Brooklyn homeowners, especially compared to the numbers we tracked over the past years. While in 2016 there were a total of 410 homes scheduled for auction in the borough, with only three quarters elapsed from 2017, there have already been 637 new foreclosures.” In Staten Island, new foreclosures were up 246% year-over-year—nearly unprecedented—although that number could be skewed by the fact that there were only 22 foreclosure starts this time last year.
Trump administration to terminate Obama’s climate plan
The head of the Environmental Protection Agency said Monday that he will sign a new rule overriding the Clean Power Plan, an Obama-era effort to limit carbon emissions from coal-fired power plants.”The war on coal is over,” EPA Administrator Scott Pruitt declared in the coal mining state of Kentucky. For Pruitt, getting rid of the Clean Power Plan will mark the culmination of a long fight he began as the elected attorney general of Oklahoma. Pruitt was among about two-dozen attorney generals who sued to stop President Barack Obama’s push to limit carbon emissions. Closely tied to the oil and gas industry in his home state, Pruitt rejects the consensus of scientists that man-man emissions from burning fossil fuels are the primary driver of global climate change. President Donald Trump, who appointed Pruitt and shares his skepticism of established climate science, promised to kill the Clean Power Plan during the 2016 campaign as part of his broader pledge to revive the nation’s struggling coal mines.
In his order Tuesday, Pruitt is expected to declare that the Obama-era rule exceeded federal law by setting emissions standards that power plants could not reasonably meet. Appearing at an event with Senate Majority Leader Mitch McConnell, Pruitt said, “The EPA and no federal agency should ever use its authority to say to you we are going to declare war on any sector of our economy.”
Obama’s plan was designed to cut US carbon dioxide emissions to 32% below 2005 levels by 2030. The rule dictated specific emission targets for states based on power-plant emissions and gave officials broad latitude to decide how to achieve reductions. The Supreme Court put the plan on hold last year following legal challenges by industry and coal-friendly states. Even so, the plan helped drive a recent wave of retirements of coal-fired plants, which also are being squeezed by lower costs for natural gas and renewable power, as well as state mandates promoting energy conservation. The withdrawal of the Clean Power Plan is the latest in a series of moves by Trump and Pruitt to dismantle Obama’s legacy on fighting climate change, including the delay or roll back of rules limiting levels of toxic pollution in smokestack emissions and wastewater discharges from coal-burning power plants. The president announced earlier this year that he will pull the United States out of the landmark Paris climate agreement.