{"id":7068,"date":"2025-12-17T07:37:14","date_gmt":"2025-12-17T12:37:14","guid":{"rendered":"https:\/\/www.deeds.com\/articles\/?p=7068"},"modified":"2025-12-17T07:37:15","modified_gmt":"2025-12-17T12:37:15","slug":"mortgage-fraud-risk-rises-as-white-house-moves-to-banish-the-watchdog","status":"publish","type":"post","link":"https:\/\/www.deeds.com\/articles\/mortgage-fraud-risk-rises-as-white-house-moves-to-banish-the-watchdog\/","title":{"rendered":"Mortgage Fraud Risk Rises, as White House Moves to Banish the Watchdog"},"content":{"rendered":"\n
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Mortgage applications with signs of fraud have increased more than 8% since this time last year. The news comes from the property analytics firm Cotality. The firm runs algorithms through applications, pinpoints possible fraud, and maintains the National Mortgage Application Fraud Risk Index.<\/p>\n\n\n\n

Cotality notes that real estate fraud rises as more investors take out multiple mortgages \u2014 sometimes on the same properties \u2014 with multiple lenders. And this year\u2019s statistics show about a third of home sales going to investor-buyers<\/a>.<\/p>\n\n\n\n\n\n\n\n

Curtains for the Consumer Financial Protection Bureau?<\/h2>\n\n\n\n
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The Consumer Financial Protection Bureau does what its name suggests. It monitors corporate behavior, and supports customers\u2019 rights in the lending world. It\u2019s a watchdog for fraud or abusive practices that can push regular buyers into financial trouble.<\/p>\n\n\n\n

The head of the White House Office of Management and Budget, Russell Vought, has also become the acting director of the CFPB. Through Vought, the Trump administration is bent on dismantling the CFPB<\/a>.<\/p>\n\n\n\n

The core staff continues to deal with complaints about unfair practices, engage in rulemaking<\/a>, and handle other routine work \u2014 perhaps until the agency is completely shuttered. That could happen soon. In early 2026, the CFPB will run out of its current funding. And the Department of Justice has submitted court filings meant to block the Federal Reserve from continuing to fund the CFPB.<\/p>\n\n\n\n

The agency came into being nearly 15 years ago, in the wake of a massive mortgage crisis. The Dodd-Frank Act (see the law\u2019s key provisions here<\/a>) set up the CFPB to enforce financial laws \u2014 particularly laws created to prevent mortgage fraud.<\/p>\n\n\n\n

The CFPB was also established to reconcile banking law and policy among states. It created standardized, predictable responses to fraud and unfairness.<\/p>\n\n\n\n

Who Will Lead if the CFPB Can\u2019t?<\/h2>\n\n\n\n

Federally, mortgage fraud is monitored by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and conventional loan-backers Fannie Mae and Freddie Mac.<\/p>\n\n\n\n

As for consumer protection, and the interpretation of mortgage fraud laws, much will fall to the states. You might ask: Is that so terrible? Aren\u2019t state-level financial agencies the main regulators of mortgage companies in any case?<\/p>\n\n\n\n

Yes, but states\u2019 ability to confront mortgage fraud is limited. While states do regulate lenders, they lack the consumer-protection powers that the CFPB had.<\/p>\n\n\n\n

Why This Matters to Homeowners<\/strong><\/p>\n\n\n\n

Rising mortgage fraud doesn\u2019t just affect lenders or investors. It can directly impact everyday home buyers through higher borrowing costs, delayed closings, unfair denials, and fewer protections if something goes wrong. Without a strong federal watchdog, consumers may have less recourse when facing deceptive loan terms, data errors, or algorithm-driven denials they don\u2019t understand.<\/p>\n\n\n\n

Where would the impact of a permanent CFPB shutdown hit hardest? Perhaps in the states with the biggest increases in indicators of mortgage fraud risk. According to Cotality\u2019s risk index, these include:<\/p>\n\n\n\n