Nearly half of real estate transactions reviewed in the first quarter of 2025 showed signs of potential wire and title fraud, according to a report from FundingShield.
The company analyzed a portfolio of residential, commercial and business-purpose loans totaling approximately $80 billion. It found that 46.8% of these transactions contained issues that could lead to fraud, with each problematic loan averaging 2.5 errors — the highest number on record.
“These findings reflect a lack of appropriate controls by closing agents and lenders to identify and fix issues,” the report stated.
Escalating fraud risks
FundingShield flagged growing concerns around closing protection letter (CPL) validation.
In Q1 2025, 10.8% of transactions had CPL-related data errors involving borrower names, property addresses, vested parties and other key elements. CPL discrepancies reached an all-time high, affecting 47.7% of all transactions.
Wire-related issues remained elevated for the sixth consecutive quarter, showing up in 8.4% of reviewed transactions. According to the report, license validation problems also persisted due to expired, suspended or improperly registered entities, with nearly 1.7% of transactions involving parties with such licensing issues.
“The persistently high levels of CPL validation errors, wire issues, and data mismatches highlight the urgent need for real-time source data verification and trusted data sets in critical mortgage workflows,” FundingShield said.
Fannie Mae increasing scrutiny
The report also highlighted a growing focus on risk management from the government-sponsored enterprises (GSE) Fannie Mae.
In Q1 2025, FundingShield said it received increased data requests from lender clients undergoing mortgage origination risk assessment audits.
As part of these audits, Fannie Mae required lenders to confirm their procedures for conducting transaction-specific reviews of closing agents, title insurers and relevant documentation at the time of closing.
A Fannie Mae representative emphasized, “It’s crucial that these checks are done for each transaction to mitigate risks effectively.”
Lenders were also asked to provide proof of frameworks ensuring recourse to rated title insurance companies and to demonstrate use of licensed parties in compliance with escrow and insurance laws.
“These requirements signal rising market risks, driven in part by growing concerns over cybersecurity and data integrity,” the report said.
Implications for the mortgage industry
FundingShield suggested that the heightened scrutiny points to a “higher expectation of risk” and a “need to further confirm recourse from title insurance firms for loans sold to the GSE.”
The company characterized its transaction-level review — which includes license verification, coverage validation and bank data checks — as a market standard to manage such risks.
“Decision-ready data from trusted sources will remain a cornerstone of the mortgage and real estate finance industry,” the report concluded. “AI solutions have the potential to significantly enhance automation, collaboration, and process improvement, but these require verified, real-time data to be effective and responsible.”
Addition statistics in the report include:
- CPL validation issues reaching record levels, affecting 47.7% of transactions in Q1 2025, up from Q4 2024.
- Wire-related errors remained high at 8.41% of transactions.
- Insurance coverage issues stayed relatively low at 0.65%.
- Licensing problems were found in 1.7% of transactions.
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