A benchmark for the estimated frequency of defects, fraud and misrepresentation in mortgage loan application documents rose for purchase deals in November 2019, the first monthly increase since March, First American Financial has announced.
The First American Loan Application Defect Index for purchase transactions increased by 2.7% in November 2019. It was still down 8.3% from a year earlier. The Defect Index for refinance transactions slipped 1.6% on the month, down 17.8% from a year earlier.
The overall Defect Index, which includes both purchases and refinances, held steady from October and was down 16% from November 2018.
“The direction of defect risk in 2020 is in large part dependent on mortgage rates and how many homeowners that are ‘in the money’ choose to refinance,” Mark Fleming, chief economist at First American, said in the press release.