Press Release
Annual mortgage fraud risk report shows emerging mortgage fraud risks
Cotality saw a 4.6% decrease year-over-year in mortgage fraud risk.
IRVINE, Calif., September 15, 2026 – Cotality, a leading global property information, analytics, and data-enabled solutions provider, released its annual mortgage fraud risk report, showing our fraud risk index decreased by 4.6% year-over-year. The report also contains new insights into why an estimated 1 in 119 mortgage applications have indications of fraud, and the growing risks the mortgage industry is facing.
Cotality saw a nearly 22% increase in mortgage applications from Q2 2025, despite higher interest rates. Refinances rose year-over-year until Q1 2026, and then dropped to just 28% of overall applications, the lowest level we've seen in the last six quarters.
As borrowers manage higher interest rates, mortgage delinquencies, foreclosures, and other economic uncertainties, the industry should be preparing for mortgage fraud risks to increase as well.
Emerging fraud risks
AI
Documents altered with AI present a challenge for lenders, who are encouraged to look for patterns in the data because this type of fraud is not always easy to spot on a loan-by-loan basis. Whether those patterns are a high percentage of self-employed borrowers, a common tax preparer or consistent even numbered income among a subset of loans, these are the red flags that can indicate possible fraud.
"While fraud risk is relatively rare, it is very costly when it’s found. With AI, altered documents have become tougher than ever to identify, so having the data to spot red flags and find that ‘needle in a haystack’ is more important than ever," said Matt Seguin, Cotality fraud solutions. "Mortgage fraud, like other crimes, has three general elements driving it - motivation, opportunity and means. The motivation in our industry is usually money or getting someone’s dream house. The means are simpler than ever with AI but having the knowledge and forethought to identify opportunities are really important. Data and pattern recognition can play a big part in the fraud prevention process."
Non-agency
In 2026, we saw an increase in DSCR loan volume, with lenders keeping mortgage fraud prevention top of mind. Based on Cotality's data, the multi-family segment continues to have the highest fraud risk, even as that risk decreased by 2.5% year-over-year, making an investment in prevention warranted.
WIRE/BEC Fraud
Cotality's clients are asking more questions about wire and BEC fraud, which based on Suspicious Activity Report Stats, wire fraud filings have nearly doubled year-over-year. We recently shared how they can protect their business.
Policy and regulatory changes
This year, the FHFA directed the GSEs to accept the VantageScore 4.0 model and the future use of FICO Score 10T. Congress also passed the 21st Century ROAD to Housing Act which placed limitations on institutional investors. While it's not yet clear how these new policies and regulations will impact the mortgage fraud industry, they could have unintended consequences that lenders need to watch for.
To read Cotality’s full annual mortgage fraud report, visit Cotality.com/AnnualFraudReport. For more ongoing housing trends and data, visit the Cotality Insights blog.
METHODOLOGY
The Cotality National Mortgage Application Fraud Risk Index analyzes the industry's collective loan application fraud risk each quarter. CoreLogic develops the index based on residential mortgage loan applications processed by Cotality LoanSafe Fraud Manager™, a predictive scoring technology. The report includes detailed data on six fraud-type indicators that complement the national index: identity, income, occupancy, property, transaction, and undisclosed real estate debt.
About Cotality
Cotality accelerates data, insights, and workflows across the property ecosystem to enable industry professionals to surpass their ambitions and impact society. With billions of real-time data signals across the life cycle of a property, we unearth hidden risks and transformative opportunities for agents, lenders, carriers, and innovators. Get to know us at www.cotality.com.
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