Fraud and forgery attempts that appear in refinance transactions are turning out to be a rising risk factor leading to claims that end up costing title insurers hundreds of thousands of dollars.
Claims resulting from fraud or forgery now average $206,976, according to research conducted by the American Land Title Association and consulting and actuarial firm Milliman. They also account for over 40% of the total cost of refinance-related claims for title insurers, their report also found.
“This study underscores that refinances are by no means risk-free,” ALTA CEO Chris Morton said in a press release. “Fraud and forgery, which cannot be detected through a public records search, are actually more common and more costly in refinance transactions compared to purchase transactions.”
Broken down by individual category, fraud made up 22.4% of the total loss share, while forgery represented 17.7%.
The monetary total amount comes in almost seven times more than the mean cost of $30,624 attributed to all other types of loss for title companies. The findings are based on data analysis of claims reported over a ten-year period from 2014 to 2023. Participant data included nearly 162,000 claims for both purchase and refinance transactions.
The share of claims paid out for refinance-related forgery and fraud is also more than double the 20% incurred from purchases. While the average size of refinance claims are based on a wider range of monetary loss amounts compared to purchases, the severity of damages came in consistently higher, according to the report.
When refinance losses for the insurer are broken down, almost $139,000 arise from required payments remitted through the policies’ terms, while approximately $68,000 were categorized as defense costs associated with the investigation of claims and legal representation of the insurance holder.
The latest refinance figures show a marked upswing from the last 10-year report published by the two organizations in 2024. The combined percentage share of losses in the prior report, which grouped both refinance and purchases together, equaled 29%.
The average cost per refinance claim for fraud and forgery is also close to 50% higher than corresponding amount in 2024’s report of $143,000, with the total similarly factoring in both types of transactions.
Through the first half of 2025, title insurers had paid out approximately $336 million worth of claims, inching up above the amount for the same time frame one year early of $333 million, according to ALTA’s most recent market share analysis.
