A new report released by wire and title fraud prevention firm FundingShield showed a sharp uptick in loan-level risks across its more than $100 billion portfolio.
The company registered an all-time high of 3.2 issues per transaction during the fourth quarter of 2025, with more than 46% of transactions flagged for wire and title fraud risks.
Elevated defects in closing protection letter (CPL) discrepancies, wiring instruction mismatches and licensing irregularities were headlined by a 58% quarterly rise in agent licensing issues and a 10% jump in transactions that had “at least one data inconsistency.”
“The persistence of these data defects and inconsistencies underscore how dependent closing workflows remain on obtaining accurate, verified information — particularly as lenders navigate tighter regulatory expectations and increased scrutiny around data governance,” the report concluded.
FundingShield’s portfolio spans residential, warehouse-financed originations, non-qualifying mortgage (non-QM) products and securitization-bound collateral.
CPL-related discrepancies were flagged in nearly 49% of transactions during the fourth quarter and wire instruction defects arose in 8.91% of transactions, “marking the ninth consecutive quarter where wiring data remained a persistent vulnerability,” the report indicated.
The company flagged cyber-driven data inconsistencies and breaches as central themes driving risk for mortgage and financial services industry counterparties in 2026.
The FundingShield report focused on vulnerabilities in loan closing workflows. On the other end of mortgage workstreams, real estate analytics firm Cotality previously reported that fraud risk among investor applications, a subset of the non-QM sector, jumped in the third quarter.
Experts have cautioned Scotsman Guide that governance structures in mortgage sectors are failing to keep pace with rising cyber threats amplified by artificial intelligence. As attacks that leverage AI in one form or another have increased, adoption to protect with AI have not, they say.
FundingShield said in its fourth-quarter report that the “velocity of cyber events, the compounding impact of vendor layer breaches, and the growing time and cost of diligence reinforce that — especially in an AI enhanced operating environment — proactive verification before critical points in mortgage and real estate transactions is no longer optional but essential to avoiding exposure.”
