The government-backed mortgage giant reported that tips and investigations into multifamily fraud fell to a 12-month low, according to a partially redacted analysis published by its regulator, the Federal Housing Finance Agency.
The decline follows a sharp increase in reported activity just a year earlier. Fannie said it received a flood of tips related to multifamily mortgage fraud in 2024, prompting 193 investigations, up from 14 in 2022. The agency confirmed fraud in 87 cases last year, compared to just three two years earlier.
Fannie said these numbers are now declining, noting that no potential fraud was found in its sample of 44 high-risk loans between September 2024 and January 2025. As of July 2025, multifamily mortgage fraud tips and investigations at Fannie were at their lowest level in a year.
The findings were part of an analysis by the FHFA examining Fannie’s allowance for credit losses, or the amount Fannie sets aside to cover losses. Fannie, which does not make loans but buys loans from private lenders, has set aside $752 million through 2024 to cover credit losses, citing mortgage fraud as a key factor.
The conclusions came amid significant unrest among housing finance agencies. In 2025, FHFA director Bill Pulte appointed himself chairman of both Fannie Mae and Freddie Mac and removed 14 board members. Fannie’s CEO left abruptly later that year, and several senior executives in the multifamily division have since left, including a former deputy general counsel involved in overseeing fraud investigations.
Prior to the FHFA report, there was little evidence that multifamily mortgage fraud was declining. Apartment owners continued to struggle in 2025 as higher interest rates squeezed cash flows, and lenders like Walker & Dunlop and Merchants Bank of Indiana disclosed fraud-related issues in earnings reports.
“From the report, it seems like multifamily fraud has largely disappeared – and was mainly a problem in the early 1920s, but I don’t think it just disappeared,” said Joseph Kahn of VisionRE, a real estate consulting firm. “More likely, the agencies’ increased scrutiny has pushed much of it into CMBS, and we’re seeing the consequences as these loans deteriorate.”
Others echoed the sentiment. Christopher Whalen, chairman of Whalen Global Advisors, which consults and analyzes financial institutions, said: “Fraud is an ongoing problem for both companies. [Fannie and Freddie]. I suspect this will increase in 2025-2026.”
Whalen said neither Fannie nor Freddie should be involved in the multifamily space.
“They don’t have the people or resources to underwrite the credit. The same goes for HUD. As the quality of multifamily assets continues to decline, it will become the new subprime asset class.”
Following the Covid-19 pandemic, Fannie, Freddie Mac and the FHFA discovered an increasing amount of mortgage fraud involving borrowers inflating rents or transferring properties to related parties. The goal was to secure larger loans than they would otherwise have received. The investigations resulted in Fannie and Freddie blacklisting dozens of industry players, including title agencies, brokers, borrowers and attorneys, along with guilty pleas and criminal charges.
The FHFA report also revealed the findings of one of Fannie’s first fraud investigations. In November 2023, Fannie stopped doing new business with an unnamed mortgage brokerage. Fannie assessed 126 risky loans at the brokerage. It brought in outside consultants and accountants and found seven loans with “confirmed signs of fraud,” the FHFA report said.
Although the brokerage was not identified, Meridian Capital was blacklisted by the agencies around the same time. Meridian was removed from the agency’s blacklist in 2025. Meridian did not return a request for comment.
From there, the agency received more tips about multifamily fraud, most of which were filed internally. Fannie said the majority of tips led to investigations that were closed with “no fraud found.”
But Fannie reported a huge increase in tips and investigations in 2024. The influx caused the agency to report the increase in mortgage fraud referrals as an emerging risk to Fannie Mae’s board of directors.
Fannie said that recently, mortgage fraud investigations have begun to decline.
Fraud was not mentioned as a major factor in the provision for losses on multifamily loans in Fannie’s most recent report to the Securities and Exchange Commission.
Fannie has implemented internal changes to prevent mortgage fraud. It said it has increased appraisal requirements and hired more staff to review appraisals and property conditions.
The agency has also taken further action against certain lenders where mortgage fraud was discovered.
Fannie needed three lenders to buy back five loans. Fannie has kicked eight lenders out of its preferential delegation, meaning they will have to overcome more obstacles to make Fannie loans.
“Fannie Mae takes mortgage fraud very seriously and we hold accountable those who enable or participate in fraud and other criminal activity,” Fannie said in a statement.
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