While the fourth quarter's mortgage fraud risk rate fell 55 basis points from the prior three months, loans submitted during the period had a record average issues per transaction, the Fundingshield Wire Fraud Risk Report found.

The last three months of 2025 was a period where a near 9% increase in volume from the third quarter was expected according to Fannie Mae's December forecast.

Fundingshield found that 46.05% of transactions in a $100.5 billion portfolio of mortgages had some form of issue which posed significant wire fraud and/or title risks.

Those mortgages averaged 3.2 issues per transaction, an all-time high, Fundingshield declared.

Closing protection letter discrepancies were reported for 48.78% of reviewed transactions, with defects in borrower data, vesting information, titleholder details and property identifiers.

"These patterns point to widening gaps between lender and title datasets, compounded by vendor oversight instability and cyber-driven data inconsistencies that complicate verification across closing workflows," Fundingshield Chairman and CEO Ike Suri said in a press release.

Wire instruction defects were found in 8.91% of the files reviewed, which made nine consecutive quarters where this was "a persistent vulnerability," Fundingshield said.

Agent licensing irregularities are an issue to watch. The 3.47% occurrence rate is a new high, up 58% from the third quarter.

Data inconsistencies rose, with 10% more transactions having at least one mismatch between lender, title and settlement systems.

Fundingshield highlighted a fourth quarter cybersecurity incident, which it said highlighted how interconnected the mortgage industry's communications and data channels are.

In November, SitusAMC disclosed that its systems had been compromised.

Because major institutions rely on SitusAMC for loan‑level data used in securitization, collateral, and diligence workflows, the disruption introduced new risks around data provenance and opened potential avenues for fraud in closing, payoff, or recording‑related processes, Fundingshield pointed out. 

Suri also pointed to an October event, when the owner of Universal Abstract, Joshua Feldberger pleaded guilty to one count of bank fraud conspiracy in a New Jersey federal court. Another person allegedly involved in the scheme, Mendel Deutsch, pled guilty in November to one count of bank and wire fraud conspiracy and one count of wire fraud.

They were two of the three people indicted in the scheme which alleged they helped obtain mortgages on properties they did not own by manipulating ownership, title and escrow representations.

This case illustrates "how compromised title and payoff data can be weaponized inside closing workflows whether or not the title company was complicit," Suri said.

On the other hand, the Homebuyers Privacy Protection Act, better known as the trigger leads ban which goes into effect in March, "will limit borrower data circulation, reducing information that can be exploited in payoff and wiring frauds," Suri pointed out.

In today's artificial intelligence-enhanced operating environment, being proactive and verifying the data before critical points in the transaction is no longer optional but essential for participants to avoid exposure, he continued.