Press Release
Mortgage fraud risk decreased in beginning of 2026
Cotality National Mortgage Fraud Application Risk Index shows risk is 121 in Q1 2026, a decrease from 133 in Q4 2025.
- An estimated 1 in 129 mortgage applications had indications of fraud.
- Undisclosed real estate fraud continues to show the largest increase in fraud risk in Q1 2026.
- Fraud risk is being driven higher by increased volume of investment property applications.
IRVINE, Calif., June 1, 2025 —Cotality, a leading global property information, analytics, and data-enabled solutions provider, released its latest National Mortgage Application Fraud Risk Index for the first quarter of 2026. Mortgage fraud risk decreased by 9.3% year-over-year and 9% from the previous quarter (Q4 2025). This is a return to historical averages as refinances increased to 41% in Q1 2026. An estimated 1 in 129 mortgage applications showed indications of fraud.
The largest year-over-year increase in Q1 2026 remained the Undisclosed Real Estate category at 7.7%. Undisclosed Real Estate may also result in undisclosed debt, possible occupancy misrepresentation and/or derogatory credit events (foreclosure, notice of default, short sale, etc.) being hidden from the lender. This increase appears to be driven by more volume in investment property applications. Historically, these alerts are 2.5 times more likely to fire on an investment property vs an owner-occupied property. All other fraud risk categories continued to show a decrease year-over-year for Q1 2026.
However, Cotality’s data continues to show year-over-year the two highest risk categories are in the investment and multi-family categories. For reference, Cotality’s data estimate for Q1 2026 is 1 in 44 investment applications and 1 in 29 multi-family applications have indications of fraud risk, compared to an overall average estimate of 1 in 129 for the industry.
“We saw that surge of investor volume from last year plateau and begin to decrease in Q1 2026 as an overall portion of the applications. In Q4 2025 investment and multi-unit represented 13.4% of applications but that dropped to 12% in Q1 2026, roughly an 11% decrease,“ said Matt Seguin, Cotality Mortgage Fraud Solutions senior principal. “Lenders should remain diligent on fraud reviews, especially around investor and multi-unit homes as the underlying data does continue to show some risk there even with an overall decreasing fraud index. It’s also worth noting, that while all fraud risk categories declined year-over-year, except undisclosed real estate, we do see property (inflated value) and transaction fraud risk both have risen quarter-over-quarter, 1.4% and 7.1% respectively.”
Cotality saw overall applications increase 6.7% from Q4 2025 to Q1 2026. Purchase share continues decreasing – now accounting for 59% of transactions. Government-backed applications dipped slightly to 23% of all applications.
Cotality’s team analyzed our most predictive alerts, and we see increasing trends from January to March in income, property. and occupancy risk areas.
Income: Increase in alerts related to high income relative to a borrower’s age.
Property: Jumps in alerts related to possible flipping of the subject property (prior sale within the past 12 months) and the seller being a corporate entity or LLC.
Occupancy: Increased alerts that a primary or a 2nd home will not be occupied as disclosed. This includes claiming the subject as a 2nd home when it’s within 25 miles of their current residence or disclosing the subject as a primary refinance with a different tax mailing address.
The top five riskiest states for indications of fraud were New York (up less than 1% in the last quarter), Florida (up over 3%), Connecticut (up 6%), New Jersey (down 6%) and California (down over 8%).
Cotality’s Q2 2026 Mortgage Fraud Report will be released in August 2026. 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.
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