Cotality Mortgage Fraud Risk Index increased in Q3 2026

Property fraud risk overtakes undisclosed debt as primary driver; multi-family and investment loans see highest concentration of risk.

• Mortgage Application Fraud Risk increased by 5.8% in Q3 2026.

• 1 in 112 mortgage applications showed indications of fraud.

• Property fraud risk increased the most in Q3 2026.

IRVINE, Calif., November 11, 2026 - Cotality, a leader in property information, analytics, and data-enabled solutions, today released its quarterly National Mortgage Application Fraud Risk (Index) for Q3 2026. The index now sits at 139, an increase of 5.8% from 132 in Q2 2026. The year-over-year trend is up 3.5% from Q3 2025, when the index stood at 134. This translates to an estimate of 1 in 112 applications that have indications of fraud risk.

The largest year-over-year increase in Q3 is the property fraud risk category, which increased 2.3%. This is a shift from the last few months where the undisclosed real estate risk segment was the leader. In Q3, undisclosed real estate debt had the second largest increase at 1.4% compared to Q3 last year.

Property fraud occurs when information about the property or its value is intentionally misrepresented. The increase in the property risk category is not surprising with a deeply divided real estate landscape as discussed in the latest Cotality US Home Price Insights article.

"The rise in property-related fraud alerts lines up with broader industry trends we've seen, especially in high-risk markets like New York. We'll continue to see an increase in AI document manipulation, so it's important that lenders use automated trend analysis and high-predictive data alerts to identify discrepancies before they turn into losses," said Matt Seguin, Senior Principal, Fraud Solutions at Cotality.

MORTGAGE FRAUD BY THE NUMBERS

Cotality analyzed our most predictive alerts and observed increasing trends over the last quarter in identity, property and occupancy risk areas.

• Identity: Increase in alerts related to invalid social security numbers and borrower's current address history not matching any addresses in their credit history.

• Property: Jumps in alerts related to possible flipping of the subject property (prior sale within the past 12 months) in higher foreclosure markets that have rising home prices.

• Occupancy: A spike in alerts of first-time homebuyers buying an investment property, and alerts increased where first time homebuyer status is indicated yet it appears the borrower already owns one or more properties.

Overall mortgage applications decreased 11.3% from Q2 2026 to Q3 2026. Purchase share remained steady at 71% of applications. Government-backed loans also held steady at approximately 24% of applications.

Year-over-year, Cotality's data continues to show the two highest risk categories are in the investment and multi-family space. Cotality's data estimate for Q3 is 1 in 42 investment applications and 1 in 27 multi-family applications have indications of fraud risk, compared to an overall average estimate of 1 in 112 for the industry.

Overall investment and multi-family volume had a small but notable increase from 12% of overall volume in Q2 to 13% of overall volume in Q3. As we've reported before, the fraud risk in this segment of loans has historically been the highest and that remains true today. Even as interest rates continue to rise, the investor share seems to be holding steady, even increasing slightly based on the latest Cotality LoanSafe data.

Cotality's Q4 2026 Mortgage Fraud Report will be released in early 2027. 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. 

Media Contact     

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Cotality 

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