July 2012

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THE LATEST ORIGINATION Mortgage Fraud Index Falls Below Post-Crisis High According to recent data from Interthinx, incidences of mortgage fraud are on the decline, sinking to a three-year low. I Homeowners Who Endured the Crisis Still Value Ownership A new report from Churchill Mortgage indicates a continuing consumer commitment to homeownership. A owners who purchased homes between 2009 and 2010 still regard homeownership as a part of the American Dream. The survey revealed that more than 83 percent of these homebuyers believe owning a home is still an integral part of the American Dream. Furthermore, 88.7 percent of ccording to the results of a recent survey by Churchill Mortgage, the majority of home- 44 percent of respondents were first-time buyers, and 86 percent of respondents said they would encourage others to buy their first home now. With home prices increasing steadily so far in 2012, nearly 80 percent of respondents said their property had either increased or retained the same value. The overall positivity is a good respondents said they were happy with their purchases, citing a multitude of reasons such as the "stability of owning [their] own property," the relief of "getting away from renting," and "having a yard and a real 'neighborhood feel,'" to name a few. The survey also found that the market is seeing a rush by first-time homebuyers. More than 42 | THE M REPORT sign for the market, said Mike Hardwick, president of Churchill Mortgage. "As evidenced by our recent nterthinx released its quarterly Mortgage Fraud Risk Report , show- ing that the national Mortgage Fraud Risk Index has dropped below the 140 mark for the first time since 2009. The report, put together by an internal team of fraud experts at Interthinx, showed that the National Mortgage Fraud Risk Index decreased to 139, 4.3 percent down from last quarter, 3.1 percent from the first quarter of 2011, and lower than it has been since the second quarter of 2009. The number of "very high risk" metropolitan statistical areas (MSAs) also fell, dropping from 67 to 62. Florida and California together house more than half of the nation's "very high risk" metros, with Florida being home to half of the top 10 risk- iest ZIP codes in the United States. Florida was also named third riskiest state, though California actually saw its own risk index decline from 192 last quarter to 173 this quarter and experienced declines in type-specific risk across nearly all categories. Nevada took back its first-place spot as "Riskiest State" after coming in second to Arizona in the last quarter of 2011. Nevada has the dubious honor of dominating this category consistently, falling out of first only three times since Interthinx started releasing its quarterly report in Q2 2009. The New York tri-state area saw continued increases in risk this quarter. New Jersey moved up to its highest rank so far on the list of riski- est states, coming up to fourth place. New York also moved up, cracking the top 10 riskiest states for the first time. The two riskiest ZIP codes in the country—representing Clifton, New Jersey; and Jamaica, New York—were from the tri-state area, as well. While some states and the nation as a whole experienced decreases in risk indices, the report showed an increase in employment and income fraud risk of 5 percent from Q4 2011 and 18 percent from last year. Interthinx analysts said they think the increase is due to misrepresentation of borrower data to meet thresholds required by lenders. Also of note was a surge in refi- nancing activity as mortgage rates continued to fall. This surge has led to changes in loan applications that have caused many of the trends seen over the last year, the report speculated. Based on the results of the report, Interthinx warned that areas that have been consistently risky— like Arizona, Nevada, and Florida— will likely continue to see high foreclosure rates in the near future. The company warned that these high-risk areas "bear close scrutiny going forward." survey, confidence levels in the housing market are improving," he said. "Fewer borrowers are experiencing buyer's remorse, and not one survey respondent said they regretted their decision. This is a positive sign we're seeing, and by 2013, we can expect to see greater home sales and a more stable economy." {-4.3% } Percentage decrease from last quarter's National Mortgage Fraud Risk Index—lower than it has been since the second quarter of 2009. SECONDARY MARKET ANALYTICS SERVICING ORIGINATION

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