Press Release
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November 13, 2025
Mortgage fraud risk rises as prices drop
- Mortgage fraud risk increased 8.2% year-over-year, with an estimated 1 in 118 applications showing indications of fraud.
- Undisclosed real estate fraud significantly increased year-over-year, as more investors juggle multiple mortgages with multiple lenders.
- Risk alerts for decreasing home prices across most of the U.S. increased by 400% year over year.
IRVINE, Calif., November 12, 2025 — Cotality, a leading global property information, analytics, and data-enabled solutions provider, released its latest National Mortgage Application Fraud Risk Index for the third quarter of 2025. Mortgage fraud risk increased by 8.2% year over year; however, it dropped by 2.7% from the previous quarter. An estimated 1 in 118 mortgage applications have indications of fraud.
Cotality examines six areas of mortgage fraud and found an increase in only one area — undisclosed real estate fraud. This category of fraud increased 9.1% year-over-year. Undisclosed real estate fraud includes undisclosed debt, possible occupancy misrepresentation, and/or derogatory credit events (foreclosure, NOD, short sale, etc.) being hidden from the lender. The increase in undisclosed real estate fraud could be due to the rise in investors and more people being forced to rent because of high home prices and mortgage rates.
“Undisclosed real estate was once again the fraud segment with the highest increase. As the percentage of investors grows, more borrowers have multiple properties and mortgages. Oftentimes, those mortgages are being refinanced simultaneously, and they may be with different lenders. This could be why we’re seeing a continuing uptick in undisclosed real estate debt,” said Matt Seguin, senior principal, Cotality Fraud Solutions.
Overall mortgage applications increased 8% from Q2 2025 to Q3 2025. The share of applications for a purchase continues to remain high but decreased to 67% of transactions. The share of total applications that are government backed remained steady at 25% of applications.
Cotality’s system for warning about falling property values has seen a large increase in alerts, jumping 42% in the last quarter and 400% compared to a year ago. Cotality's Home Price Index confirms prices are dropping across much of the U.S as inventory increases.
Cotality also found increasing risk trends in Q3 in several other areas: income, identity, and occupancy.
Income: An increase in alerts related to high income compared to the value of the property being purchased. This could be an indicator of inflated income or misrepresentation of occupancy.
Identity: Increased alerts about attempted identity theft including using a deceased borrower’s social security number or other names associated with a social security number.
Occupancy: Increased alerts that a primary or a second home will not be occupied as disclosed. This includes claiming owner-occupied properties when there has been a rental listing found on the property or a primary residence that has a different tax mailing address.
Cotality’s data continues to show that the two highest-risk categories are in the investment and multifamily spaces. Cotality’s data estimate for Q3 2025 shows 1 in 45 investment applications and 1 in 26 multi-family applications have indications of fraud risk compared to an overall average estimate of 1 in 118 for the industry as a whole.
Cotality’s Q4 2025 Mortgage Fraud Report will be released in February 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.
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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