Despite low mortgage delinquencies in the U.S., experts warn of a potential rise in fraud as market conditions worsen. High interest rates and increased homeownership costs, such as insurance, pose challenges for sellers, which could lead to misrepresented down payments and inflated prices. The mortgage application activity in early 2025 remained stable, with purchase loans making up 67% of transactions. Notably, certain metro areas in New York and Connecticut exhibited significant increases in fraud risk, highlighting the need for vigilance in the current market environment.
According to Cotality's report, the three metro areas with the highest fraud risk were Albany-Schenectady-Troy, New York (up 82% from Q4 2024 to Q1 2025); Poughkeepsie-Newburgh-Middletown, New York (up 37%); and New Haven-Milford, Connecticut (up 30%).
Matt Seguin, Cotality's senior principal for fraud solutions, noted that the market conditions, including high interest rates and slow housing market, create a ripe situation for increased mortgage fraud.
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