Nearly 44% of mortgage transactions in the first quarter of 2026 were flagged for significant wire and title fraud risks — an increasing problem in the real estate finance industry — according to a recently released report by the fintech firm FundingShield.
While overall error rates saw a slight quarterly decline, the company’s findings underscore persistent vulnerabilities in closing and settlement workflows amid rising regulatory scrutiny and a proliferation of cyber threats.
The report analyzed a monitored portfolio valued at more than $106.7 billion, encompassing residential, commercial real estate, non-qualified mortgage loans and securitized collateral. All told, FundingShield found that 43.72% of transactions were flagged for issues in the first quarter of 2026, down from 46.05% in the fourth quarter of 2025.
However, even with this decrease, the average problematic loan exhibited an average of 2.2 issues per transaction, showing that the issue of suspicious transactions has carried into the new year.
Closing protection letter (CPL) discrepancies constituted the bulk of the defects, appearing in 43.49% of transactions during the first quarter. These defects were heavily concentrated in property identifies, titleholder details, borrower data and vesting information.
Additionally, wire instruction defects were identified in 6.92% of transactions, while licensing irregularities — such as credential mismatches and expired licenses — remained prevalent at 2.37%.
“Seeing a 14% lift in remediation efficiency shows the impact of embedding verification earlier in the lifecycle,” stated FundingShield CEO Ike Suri. “It also reflects our own evolution — FundingShield has grown from a fraud-prevention company into an infrastructure layer providing embedded cybersecurity fraud prevention solutions, delivering lenders a clear and measurable ROI as these controls move toward soon-to-be mandatory compliance.”
The regulatory market is indeed tightening. As the year unfolds, new executive orders have pushed the Consumer Financial Protection Bureau, Federal Housing Finance Agency and banking regulators “toward an effectiveness-based compliance posture,” FundingShield’s release stated.
The company’s report added that because of this, regulators are raising expectations for live verification, defensible controls and robust audit trails across settlement workflows.
