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Fraud Prevention

Property flipping, stolen or fabricated identities, falsified borrower income or bank account information, straw buyers, inflated appraisals—the list of possible approaches to committing fraud is long and growing. 

Whether fraud detection is an independent function or part of a larger department, the task of identifying fraud is becoming ever more critical to protecting profitability.  The FBI calls mortgage fraud an epidemic and the techniques used continue to become more sophisticated and harder to detect.  And, typically, the more complex the fraudulent scheme, the greater the potential for loss. 

Fraud originates from borrowers, collateral, and agents or brokers—or some mixture of the three.  Especially when combined, fraudulent sources support one another with consistent information that is partially or wholly fabricated.  Whether fraud originates from one or a combination of sources, scrutiny applied to all three provides the greatest opportunity for detection. 

In direct opposition to the need to detect fraud exists an equal need to speed good loans to funding without inappropriate or time-consuming analysis.  As with every other member of a lending institution, those responsible for spotting fraud are equally tasked with moving quickly. 

Executive view
Mortgage fraud wreaks havoc on profits by leaving the lender holding the bag.  The institution ends up owning homes worth less than the loan that will cost even more to resell, taking big bites out of profits.  Even when the property does not hit foreclosure, the lender’s portfolio is marred by poor quality loans that investors will not buy.  As the investment community becomes increasingly wary about fraud-prone loans within a pool, they are using First American CoreLogic tools to assess loan quality.  To maintain its reputation with investors and the ability to move loans into a sellable mortgage pool, lenders must ensure they spot fraudulent loans before the investor finds them during the due-diligence process. 

Surefooted speed demands dependable support of fast, accurate tools that rapidly gather data about each potential fraud source.  To be most effective, research should both look at the borrower, collateral and agent information and also compare and contrast data to spot discrepancies.  First American CoreLogic solutions enable fraud detection to amass and sift through large amounts of data quickly, weigh results against other findings, and locate the patterns most often associated with fraudulent activity.  Our team of experts includes experienced mortgage professionals and skilled technical developers who truly understand what fraud is, where it comes from, and how to identify it.

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