Key facts
- Mortgage application fraud risk increased 9.1% in Q2 2026.
- The National Mortgage Application Fraud Risk Index rose to 132 in Q2 2026.
- Purchase lending regained momentum, accounting for 72% of applications.
- Undisclosed real estate fraud alerts saw a 2.6% year-over-year increase.
- Investment and multifamily properties represent the highest-risk loan segments.
Mortgage application fraud risk saw a significant increase of 9.1% in the second quarter of 2026, reaching a reading of 132 on Cotality's National Mortgage Application Fraud Risk Index. This rise is attributed to a resurgence in purchase lending and persistently high mortgage rates that dampened refinance activity.
Despite the quarterly uptick, the index remains 4.6% below its level from the second quarter of 2025. According to Cotality, the shift towards purchase loans, which historically carry higher fraud risks due to more extensive documentation requirements compared to streamlined refinance programs, is a key driver. Overall mortgage applications grew by 5.2% from the first quarter, with purchase loans making up 72% of the total.
Specific fraud categories also showed increases. Undisclosed real estate fraud, which can conceal additional debt or prior credit issues, rose 2.6% year-over-year. Transaction, property, and occupancy-related fraud alerts also climbed. Investment and multifamily properties continue to be the segments with the highest fraud risk, with one in 44 investment property applications and one in 27 multifamily applications indicating fraud risk, significantly higher than the overall industry average of one in 119.