The First American Loan Application Defect Index, which estimates the frequency of fraudulence and defects in mortgage applications, shows Hawai‘i defects fell in 2015. Good news for those in and around the mortgage market!
Nationwide, defects and fraud fell 2.6% nationwide in December (over the previous month), with Alaska having the biggest decline at 10.8% less. Hawai‘i dropped 2.3% in December, with an index of 84. South Carolina had the biggest rise in index at 4.8% in December.
What is the Loan Application Defect Index?
The First American Loan Application Defect Index estimates the level of defects detected in the information submitted in mortgage loan applications processed by the First American FraudGuard® system. The index is based on the frequency with which defect indicators are identified. The Defect Index moves higher as greater numbers of defect indicators are identified. An increase in the index indicates a rising level of loan application defects. The index, nationally and in all markets, is benchmarked to a value of 100 in January 2011. Therefore, all index values can be interpreted as the percentage change in defect frequency relative to the defect frequency identified nationally in January 2011.
Why is this important?
Having a low application defect index plays a big role in the mortgage process for consumers. Keeping mortgage defects and fraudulence down keeps costs down for the mortgage lenders and their customers. The more errors and fraud that pass through the application process costs the mortgage companies money, which gets passed on to the consumer. High fraud and errors can also cause timing delays, which may affect a prospective buyers closing process.
If you would like to discuss this, or other loan application questions, visit your favorite loan officer or give me a call! I would be happy to refer you to some very excellent people who would be able to answer your questions. For the full breakdown, visit this link: http://www.firstam.com/economics/defect-index/
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