Mortgage Fraud Surges 7.3% as One-Third of Investors Break Federal Law

The Different Degrees of Mortgage Fraud

Obviously, stealing someone’s identity is considered a far more serious case of fraud than bumping up your income a little to qualify for a loan or a lower interest rate. In between, there are many shades of gray. 

For example, in the case of Adam Schiff, he asserts that he was transparent and received approval to label both his properties as his primary residence. If so, convicting him of fraud will be far from easy.

Many real estate investors purchased homes with an FHA mortgage intended for owner-occupants, only to rent them out later. FHA guidelines require that an owner-occupant must live in a house with an FHA mortgage for 12 months before they can move out and rent it. 

In reality, no one is coming to check the date that you moved out and a tenant moved in. However, if someone wanted to investigate you, this could be perceived as fraud, along with many other types of infractions. 

“Despite these high-profile accusations, mortgage fraud is ‘relatively rare,’” Matt Seguin, senior principal for fraud solutions at Cotality, told MarketWatch. The analytics company found that only 0.86% of mortgage applicants—about one in 116—carried the risk of mortgage fraud as of the second quarter of 2025. 

The MarketWatch article adds that the Trump administration is stepping up its efforts to clamp down on mortgage fraud by partnering with artificial intelligence (AI) company Palantir, according to Fannie Mae, which backs 25% of U.S. mortgages.

Hiding Your Data

If you’re worried you might have committed mortgage fraud in the past—albeit innocently—there are ways to hide your data, but that is by no means proof. 

Some mortgage data is public: the borrower’s name, lender, property address, and the original loan amount, as well as any refinancing and payoffs. That information is recorded in the county clerk’s office as a deed of trust.

Also included is an additional document outlining the user’s intentions for the property, sometimes referred to as a rider. This information can be found online at the county’s website. Tax information and homestead exemption—the latter included for primary residences—is also noted. Two homestead exemptions would be a red flag for anyone conducting an investigation.

DeleteMe is a service that promises to delete personal data from Google search engines. Rob Shavell, the company’s CEO, told the New York Times that the site often gets custom requests to remove mortgage data. LLCs are often considered a tool to conceal a property’s ownership, but they do not remove the mortgage data associated with the address.

Other companies performing a similar service on roving online information include Kanary and OneRep. Google also has a “Results about you” tool that allows consumers to request the removal of their personal phone number, home address, or email address from search data. 

Forensic Searches Can Unearth Troves of Information

That said, hiring a company to remove your online profile doesn’t guarantee it will be inaccessible to others.

“For identity theft purposes, it’s like tiles in a mosaic. The more tiles you have, the more the impersonation can be accurate,” Adam K. Levin, a consumer affairs advocate and former director of the New Jersey Division of Consumer Affairs, who co-hosts a cybersecurity podcast, told CNBC.

The Penalties for Mortgage Fraud

The penalties for committing mortgage fraud vary, depending on the severity of the crime. The stats are sobering. In 2021, the most recent data available, 74% of mortgage fraud offenders served prison time, with an average sentence of 14 months, according to the United States Sentencing Commission.

However, the fraud must be proven, and for residential properties owned by owner-occupants, the burden of proof needs to be overwhelming. “To have an inaccurate mortgage filing is not the same thing as having a fraudulent one,” Richard Briffault, an expert in administrative law and public policy at Columbia Law School, told the Washington Post.

Final Thoughts

Unsurprisingly, the rate of mortgage fraud committed by real estate investors is far higher than that committed by owner-occupants, according to a recent Philadelphia Fed working paper by Ronel Elul, Aaron Payne, and Sebastian Tilson, highlighted by National Mortgage Professional (NMP), due to the amount of verifiable personal data a homeowner must supply. NMP says that one-third of all investors commit mortgage fraud. 

With a heightened emphasis on investor fraud amid the housing crisis, being tempted to falsify your information is simply not worth the risk.