Mortgage fraud increased across the United States in the second quarter of 2025

IRVINE, Calif., August 21, 2025 — Cotality, a leading global property information, analytics, and data-enabled solutions provider, released its latest National Mortgage Application Fraud Risk Index for the second quarter of 2025. The Index increased 6.1% nationally year over year and 1.4% from Q1 to Q2 2025. The Index has been gradually rising over the last year as the mortgage market remains dominated by purchases. In Q2 2025, an estimated 0.86% of all mortgage applications contained fraud, or about 1 in 116 applications, compared with 0.81% (1 in 123) in Q2 2024

Data also shows notable increases in the two riskiest segments of the index: investment properties and multi unit properties. The 2- to 4-unit segment continues to have the highest risk, with about 1 in 27 transactions showing indications of fraud. These applications increased 43% year over year, while the 2- to 4-unit application risk declined 2%. VA-backed applications remain the lowest-risk category, consistent with prior years.

“The increase in the fraud risk can partly be attributed to the volatility starting to be seen in the real estate market. Interest rate cuts haven’t come at the rate expected over the last year, so purchase transactions, which historically speaking have higher fraud risk, continue to represent almost 70% of the applications seen by Cotality, “ said Matt Seguin, Sr. Principal, Mortgage Fraud Solutions.

Several industry wide factors may also be contributing to the increase in mortgage fraud. These include higher insurance costs, softening home prices in some markets (as noted in U.S. Home Price Insights, July 2025), mortgage rates that remain high compared with the past five years, and the growing popularity of non-QM loans, where fraud detection programs may lag.

Cotality analyzes data in six categories of mortgage fraud: Identity, Transaction, Property, Income, Occupancy, and Undisclosed Real Estate. All the categories except for Occupancy saw an increase in Q2 2025. The largest year-over-year increases were in undisclosed real estate debt and transaction fraud risk. Undisclosed real estate debt rose 12% this year, compared with a 5.9% decline year over year in 2024. Transaction fraud risk increased 6.2% this year, following a 4.9% increase last year.

New York and Rhode Island hold the top two positions for mortgage application fraud risk. New York has remained in the top two for the past four years, while Rhode Island is new to the top tier, pushing Florida to third. Nationwide, undisclosed real estate debt showed the largest annual increase at 12%, followed by transaction fraud risk, up 6.2%.

The annual Cotality National Mortgage Fraud Risk report will be released in September 2025, featuring a summary of annual fraud trends. For more on mortgage fraud, and ongoing housing trends and data, visit the Cotality Insights blog.

Methodology

The Cotality National Mortgage Application Fraud Risk Index analyzes the collective level of loan application fraud risk the mortgage industry is experiencing 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 for 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 data signals across the life cycle of a property, we unearth hidden risks and transformative opportunities for agents, lenders, insurers, governments, and innovators. Get to know us at cotality.com.

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