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O R I G I NAT I O N S E R V I C I N G A NA LY T I C S S E C O N DA R Y M A R K E T ANALYTICS AROUND THE U.S. ANALYTICS Florida 92 -4.20 Oklahoma 91 4.60 South Carolina 87 7.40 Michigan 85 -18.30 Texas 85 1.20 Arkansas 80 -13.04 District of Columbia 80 2.56 Tennessee 79 -5.95 Arizona 79 -7.06 Idaho 79 -8.14 Utah 78 1.30 New York 78 -11.36 Washington 77 -11.49 Georgia 77 -9.41 Connecticut 76 -11.63 Illinois 76 -5.00 Alabama 76 -16.48 Maryland 75 -3.85 California 75 -9.64 Wisconsin 75 -11.76 Vermont 74 -19.57 Louisiana 74 -14.94 Oregon 72 -8.86 Colorado 72 -10.00 New Mexico 72 -10.00 Kentucky 72 -1.37 New Jersey 71 -4.05 North Carolina 71 -4.05 Ohio 71 -16.47 Rhode Island 70 0.00 Minnesota 70 -20.45 Nevada 70 -14.63 Virginia 70 -4.11 Indiana 70 -14.63 Minnesota 70 -20.45 Missouri 68 -9.33 Delaware 68 -10.53 Mississippi 67 -18.29 Montana 66 -20.48 Massachusetts 66 -2.94 Alaska 66 -13.16 Kansas 63 -14.86 Pennsylvania 63 -12.50 Nebraska 62 -13.89 North Dakota 61 -15.28 Iowa 61 -8.96 Wyoming 60 -20.00 New Hampshire 60 -9.10 West Virginia 57 -12.30 South Dakota 50 -26.50 Maine 50 -25.40 Source: First American "December 2015 Loan Application Defect Index" 58 | TH E M R EP O RT STATE MORTGAGE DEFECT FREQUENCY YEARLY CHANGE (PERCENT CHANGE) Mortgage Loan Defects at an All-time Low M ortgage loan defects, which can lead to fraudulence and misrepresentation in loan applications, are disappearing in the industry at a rapid pace and are expected to become less prevalent in the future as the housing market normalizes. First American Financial Corp.'s December Loan Application Defect Index shows loan defects declined by 2.6 percent from November 2015 to December 2015 with an index 76. The index, which estimates the frequency of defects, fraudulence, and misrepresentation in the information submitted in mortgage loan applications, is down 8.4 percent year-over-year and down 25.5 percent from the all-time high point of risk recorded in October 2013. According to First American, the index, nationally and in all markets, is benchmarked to a value of 100 in January 2011 and all index values can be interpreted as the percentage change in defect frequency relative to this benchmark. "As with many housing market statistics today, the misrepresentation and defect risk trend is consistently for the better. Risk at the high end continues to improve, causing our dispersion index to decline by another point on a month- over-month basis," said Mark Fleming, Chief Economist at First American.