September's mortgage application defect risk declined 1.4%
A defect or misrepresentation in a mortgage loan application is a red flag for mortgage fraud.
Compared with August, the defect index is unchanged for refinance applications but it increased by 1.3% for purchase applications.
On a year-over-year comparison, the refi defect index fell by 16.9%, while it fell by 8% compared with August.
"The market is in transition toward a greater volume of riskier purchase loans, away from a market dominated by lower-risk refinance loans. Yet, overall the defect index continues to decline, which is a testament to the effort the mortgage finance industry is making to improve the loan production process," said First American chief economist Mark Fleming.
"The widespread implementation of data- and technology-enabled loan manufacturing processes is benefiting consumers across the country," he added.
Maine had a 25.5% increase in application defect frequency during September compared with the previous year, followed by North Dakota (14.8%), South Dakota (11.3%), Vermont (10.4%) and Missouri (7.2%).
On the other hand, the states with the largest declines in application defects were Michigan (26.5%), Florida (24.2%) and California (21%).
