FundingShield reported that during Q3 2025, nearly 46.6% of transactions within an approximately $90+ billion portfolio—spanning residential, commercial, NonQM and business-purpose loans—were flagged for issues posing significant wire and title fraud risks. Each of these problematic loans exhibited an average of 3.1 issues per transaction, a record high and a 35% increase from last quarter, indicating intensified issue concentration.

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Percent of transactions with risk findings by quarter

The mortgage and settlement services industry continues to face elevated risks across all categories, with data integrity and closing controls remaining top priorities. FundingShield’s plug-and-play solutions, embedded within loan closing workflows and integrated into loan origination systems where most optimal, proactively detect and block threats in real time before funds are transferred. The mortgage and settlement services industry continues to face systemic vulnerabilities, with data integrity and closing controls remaining critical weak points. FundingShield’s embedded remediation capabilities have changed the game for wire and title fraud prevention. Clients increasingly demand these solutions—especially when offered at no additional cost—driving accelerated adoption across the industry.

Q3 2025 saw record-high CPL validation errors (10.52% of transactions) involving critical data points such as borrower information, vesting parties, non-borrowing title holders, and property addresses. A 12.69% quarter-over-quarter increase in CPL-related issues highlights growing challenges in closing agent verification and CPL/title policy enforceability. This trend likely reflects heightened scrutiny following recent regulatory guidance and the emergence of more sophisticated fraud schemes exploiting gaps between lender and title systems.

Wire-related errors occurred in 9.14% of transactions—marking the eighth consecutive quarter above 8%. License issues remained elevated at 2.19%, driven by entities with lapsed, terminated, or suspended licenses and inconsistent data across registrars, insurance regulators, and licensing bodies. These persistently high levels, combined with CPL validation and key data mismatches, underscore the need for source data verification and trusted datasets in critical workflows.

The dramatic 23.11% spike in license-related problems is among the most concerning trends this quarter, signaling widespread compliance failures among closing agents and title companies. Many are operating with expired or improperly maintained licenses, increasing liability exposure for lenders and likely triggering more enforcement actions by state regulators. Expect heightened regulatory scrutiny in Q4 2025.

Key Risk Metrics:

Quarter-over-Quarter Comparison (Q3 2025 vs. Q2 2025)

• License Issues: 23.11%
• Wire Instruction Issues: 6.62%
• Insurance Issues: 16.44%

Fannie Mae’s MORA audits are increasingly focused on seller diligence around title, closing, escrow, and related service providers. These audits emphasize transaction-level validation of closing agent data, licensing status, and enforceability of claims. They align with broader mandates under Dodd-Frank, CFPB oversight, FHFA 2025 Scorecard and GSE seller/servicer guidelines, reinforcing third-party vetting and monitoring. State banking regulators and other GSEs also conduct periodic audits to ensure compliance in escrow management, delinquency handling, and servicing workflows. Fannie Mae, in collaboration with Palantir, launched an advanced analytics programs to detect fraud and anomalies in loan data, reflecting a broader shift toward real-time risk monitoring. FundingShield issued a press release discussing our alignment with the FHFA’s stated goal of reducing fraud in the mortgage market.

These audits reflect growing industry challenges from cyber threats, fraudulent parties, and the need for robust fraud prevention tools in closing and title workflows.

The trends highlight the importance of source data verification and trusted, independently validated datasets. Without these controls, lenders face increased exposure to fraud, compliance violations, and post-closing recovery challenges.

In Q3, one of the largest B2B data breaches occurred, with Google and Salesforce estimating 2.5 billion records compromised, affecting over 760 organizations including Top Global corporations, firms like Cloudflare, and Palo Alto Networks among others. Such breaches erode trust in digital systems and complicate identity verification across industries—including real estate. As wire fraud schemes increasingly rely on impersonation and data manipulation, these breaches amplify both risk and complexity.

Conclusion

As fraud risks and regulatory demands grow, the mortgage industry must tighten controls over data accuracy, third-party oversight, and transaction integrity—aligned with FHFA guidance, GSE selling guides, investor requirements and federal standards. FundingShield uniquely delivers embedded, real-time validation and remediation within closing workflows and systems of record, ensuring verified data on agents licensing, insurance, and transaction details. Our solutions don’t just detect risk—we prevent and remediate in real time, keeping loan closings on track while reducing fraud, operating cost and improving loan quality. With rate cuts expected to drive a surge in refinancing, we anticipate fraud volumes to double—reinforced by this quarter’s record-high risk concentration.

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"Our solutions don’t just detect risk—we prevent and remediate in real time keeping loan closings on track while reducing fraud, operating cost & improving loan With rate cuts expected to drive a surge in refinancing, we anticipate fraud volumes to double"