A recent uptick in mortgage application defects might be reversing, according to First American Financial.
The company's Loan Application Defect Index indicated a 2.4% month-to-month decrease in August and an 8.9% drop since the same time last year.
The defect rate in mortgage applications is now 19.6% lower than its peak in October 2013. But the August result reversed a trend where the index showed increased risk after hitting its low point in March.
"While nationally, defect risk has been increasing throughout the home-buying season, this month's index moved countertrend toward less risk," said Mark Fleming, the chief economist at First American, in a press release. He noted that defect risks were more prevalent in Texas, Florida and Michigan.
"Nonetheless, given the increasing number of homes lost to wildfires in California, we are monitoring these natural-disaster-impacted markets closely for any increase in fraud-related defect risk," he added.
