Cotality says mortgage fraud risk rose 9.1% in Q2
Mortgage application fraud risk increased in the second quarter of 2026 as purchase lending regained momentum and higher mortgage rates kept refinance activity subdued.
The recent report from Cotality indicating a 9.1% rise in mortgage fraud risk during the second quarter of 2026 is a concerning development for the construction industry. As purchase lending picks up, it's likely that construction activity will also increase, but the heightened risk of mortgage fraud could lead to more stringent lending practices. This, in turn, may affect builders and developers who rely on a smooth flow of financing to keep projects moving forward.
The shift in mortgage lending dynamics, with purchase lending regaining momentum and refinance activity remaining subdued due to higher mortgage rates, is also worth noting. For construction firms, a strong purchase market can be a double-edged sword. On one hand, it can drive demand for new homes and commercial projects, but on the other hand, it may lead to increased scrutiny from lenders and regulators. As the industry navigates this changing landscape, it's essential for builders and developers to prioritize compliance and risk management.
Looking ahead, it's crucial for construction firms to stay vigilant about the risks associated with mortgage fraud. As lenders become more cautious, they may tighten their requirements for borrowers and developers, which could impact project funding and timelines. To watch next: how will lenders and regulators respond to the rising mortgage fraud risk, and what measures will construction firms take to mitigate these risks and ensure the integrity of their projects?
Originally reported by housingwire.com. ConstructionNews adds analysis for real estate & property readers.