IRVINE, Calif.–Mortgage fraud risk increased 8.2% year-over-year, with an estimated 1 in 118 applications showing indications of fraud, according to Cotality’s new Q3 2025 National Mortgage Application Fraud Risk Index.
The index, which measures quarterly trends in mortgage application fraud across the industry, is based on data from Cotality’s LoanSafe Fraud Manager, which uses predictive scoring technology to assess risk, the company said. It tracks six types of fraud indicators: identity, income, occupancy, property, transaction and undisclosed real estate debt.
Increase in One Category
Out of the six areas Cotality evaluates, the company said it only found a rise in one of the categories: undisclosed real estate fraud. That type of fraud, which includes hiding debts, misrepresenting occupancy or concealing derogatory credit events from lenders, climbed 9.1% from a year earlier, the data show.
“Undisclosed real estate was once again the fraud segment with the highest increase,” Matt Seguin, senior principal with Cotality Fraud Solutions said in a statement. “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.”
What Was Also Revealed
The company said its analysis also shows:
- Overall mortgage applications rose 8% from Q2 2025 to Q3 2025. Purchase applications made up 67% of total volume, a quarterly decrease, while government-backed loans held steady at 25%.
- Cotality also reported sharp increases in its property value warning system, with alerts up 42% from the prior quarter and 400% from a year ago, as home prices declined across much of the U.S.
- Fraud risks tied to income, identity and occupancy also increased. The company cited more alerts for inflated income, identity theft attempts and properties misrepresented as owner-occupied.
- Investment and multifamily loans remain the most at risk, with signs of fraud in one of every 45 investment applications and one of every 26 multifamily applications.
