Mortgage Fraud Surges 7.3% as One-Third of Investors Break Federal Law
Summary
Mortgage fraud is on the rise, and a significant portion of real estate investors are implicated, potentially jeopardizing their properties. Hosts should be aware of the different types of mortgage fraud and the risks associated with misrepresenting information during the loan application process.
Key Insights
- •The year-over-year trend for mortgage fraud in the first quarter of 2025 is up 7.3%.
- •One-third of all investors commit mortgage fraud.
- •Only 0.86% of mortgage applicants—about one in 116—carried the risk of mortgage fraud as of the second quarter of 2025.
Action Items
- ✓Hosts who have used a property as a STR and misrepresented the primary residence status on a mortgage should review their situation and seek legal counsel if they have any concerns.Effort: highImpact: high
Common Mistakes
- ⚠Using an FHA loan for owner-occupancy but renting the property out shortly after closing could be considered fraud.
- ⚠Falsifying information on a mortgage application can have significant consequences, including the lender demanding full repayment of the mortgage or foreclosure.
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