Press Release
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June 23, 2025
Cotality: Mortgage fraud risk holds steady in the first quarter of 2025
- The risk of mortgage fraud has increased by 7.3% year-over-year.
- The transaction risk category saw the most significant increase.
- Albany, NY and Poughkeepsie, NY saw the highest quarter-over-quarter increase in mortgage fraud risk.
IRVINE, Calif., June 23, 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 2025, showing the index is at 133, down 0.3% from the end of 2024. The year-over-year trend is up 7.3% from Q1 2024, when the index stood at 124.
The largest year-over-year increase in Q1 2025 is in the transaction risk category at 4.6%. Transaction risk applies to applications where elements of a home purchase transaction were not fully represented to the lender. Hidden sales concessions, non-arm's length sales, and rapid property flipping are examples.
“While mortgage delinquencies are currently low across the U.S., the market is ripe for an increase in fraud because of the continuing high interest rates, slow housing market, and other increasing costs of homeownership like insurance affordability,” said Matt Seguin, Sr. Principal, Fraud Solutions. “If market conditions continue to challenge sellers, risks like misrepresented down payments, inflated prices, and straw buyers could increase dramatically.”
Overall mortgage applications remained steady from Q4 2024. Purchase share remains high at 67% of transactions. As was the case last quarter, the share of government-backed loans increased again, from 24% to 26% of applications.
Cotality analyzed the indicators that predict elevated fraud activity. There were moderate increases from December to March for the following trends:
- Income: High income relative to time on the job and/or for the geographic area.
- Transaction: Alerts on purchase transactions with multiple high-risk elements are trending up, such as inconsistent property value relative to the borrower's age or depreciating markets
- Occupancy: Increased alerts that a primary or secondary home will not be occupied as disclosed.
- Property: Higher levels of alerts for values in the higher ranges of geographic areas and properties being resold within one year of a prior transaction.
The number of owner-occupied properties listed for rent within the last 180 days increased by 50%, the largest quarter-over-quarter increase; however, other indicators point to stabilized occupancy risk.
The next Cotality National Mortgage Application Fraud Risk Index will be released in August 2025, featuring data for the second quarter of 2025. For ongoing housing trends and data, visit the Cotality Insights blog.