Mortgage fraud is not sexy. But it is costly and expensive.

How costly and expensive, one might ask?

For every $1 lost to fraud at financial institutions, it costs $4.23 to address it, an increase of 16.2% from 2020. At mortgage firms the cost was $4.20 and at banks the cost was $4.36.

Overall the cost is up almost 20% in the U.S., according to the LexisNexis Risk Solutions 2022 True Cost of Fraud study.

The cost of fraud is related to labor and investigation and fees incurred during the application/underwriting/processing stages, legal fees and external recovery expenses.

The study also found that fraud attack volume continues to rise as criminals use stolen or fake identification to open new accounts. For mortgage institutions application fraud was also an issue.

The study, which surveyed about 500 risk and fraud executives in financial and lending companies in the U.S. and Canada, did not include insider or employee fraud.

Considering that about 6 million existing homes changed hands this year and another 685,000 new homes were sold, the money lost to fraud adds up. Some speculate that the losses are in the billions of dollars.

And that leads to a second question: why is it happening?