How can lenders guarantee the quality of loans among higher volumes?
Modern lenders need reliable tools with robust analytics to assess and mitigate risk and improve loan quality. In addition to the traditional fraud risks, COVID-19 and its complications create new opportunities for “bad actors”. Employment and income verification and property valuation require reasonableness testing to detect fraud early in the mortgage life cycle.
FraudGuard by American Premier uses best-in-class data and real-time due diligence to detect fraud, ensure investor compliance, reduce redemption risk, and automate loan quality checks.
By leveraging public, private and proprietary data sources, FraudGuard helps lenders:
- identify potential fraud risks and errors in mortgage loan applications
- comply with regulations
- improve the application review process with increased speed and efficiency
- increase the quality of loans
First American’s FraudGuard solution is a comprehensive support tool for lenders, designed to quickly and accurately identify risks associated with mortgage transactions.
“First American has developed the next generation risk mitigation solution,” said Paul W. Harris, head of First American’s mortgage analysis business. “We provide clients with access to our extensive inventory of data and analytical APIs, many of which are built around core FraudGuard competencies, such as identity, occupancy, ownership and watchlists. ‘industry.
“Customers can use these APIs earlier in the loan process to address key loan quality issues and leverage FraudGuard downstream for a complete view of loans, creating workflow efficiency while reducing lead times. and operational costs, ”continued Harris. “Our deep understanding of our customers’ workflow enables us to deliver highly customizable solutions, making FraudGuard an unrivaled tool in the market. “
FraudGuard’s intelligent and highly optimized analytics and support data are also configurable by loan program type, allowing lenders to define rule sets and alert messages based on their own needs.
The report output is dynamic and displays evidence of data that supports analysis, while removing unnecessary information. These features streamline the process, allowing for quick revisions.
In addition to new loan guidelines put in place by government sponsored businesses (GSEs) due to COVID-19, many lenders are implementing their own overlays with requirements beyond what they typically use with Investors. FraudGuard alerts can be easily adjusted to encompass these metrics.
“When we initially set out to create FraudGuard, the primary focus was on mortgage fraud, but it became much more than that: helping lenders mitigate risk and adhere to guidelines,” said Jen Menard, senior director of produced at First American. Business.
“And in this new fluid and dynamic environment, it now helps lenders do more in-depth research on real estate ownership and liabilities, such as past and current foreclosure activity and data on owners and condominium associations.”
As lenders work to mitigate risk in the COVID-19 environment, FraudGuard is a valuable tool in the following areas of the mortgage life cycle.
- Risks of abstention: Since GSEs allow lenders to offer borrowers forborne for up to three mortgage payments, such forbearances will lead to liquidity pressure for many non-bank lenders as well as an increase in the number of borrowers trying to default. payments when they are not eligible. FraudGuard can help verify that a borrower is eligible for forbearance with employment and income alerts.
- Refinancing risks: Refinancing risks arise when a borrower submits false information about their income to persuade the financial institution to modify or refinance the loan on more favorable terms. As the 4506-T is not currently available, the risk of fraud is higher here. First American recommends using FLEX (FraudNet Loan Exchange Review) alerts to identify loan purchases and income discrepancies, as well as checking multiple credit applications in Debt Monitoring.
- Employment Verification (VOE) with process change: Although GSEs have removed the VOE guidelines and will accept pay stubs and bank statements for VOE, most lender overlays require a verbal VOE. FraudGuard users can activate all applicable online business alerts to ensure correct contact information.
- Credit slamming risks: The slamming of loans happens every time someone plays the spread. As stay-at-home and social distancing orders have impacted registrars, there is a risk of a larger gap in many areas. FraudGuard users can use FraudGuard FLEX to check multiple open requests / orders, and the Undisclosed Debt Monitor module to check multiple credit report requests.
- Identity risks: As more states allow the use of Remote Online Notarization (RON), identity verification is more important than ever. Although FraudGuard cannot be used to verify identity for RON, enabling all applicable borrower identity alerts on the platform can help ensure valid identity information earlier in the process. loan.
“As GSE’s guidelines continue to change, First American FraudGuard is committed to keeping our customers up to date and in compliance,” said Brian Haber, FraudGuard Product Manager.
“Our innovative features, driven by cutting-edge data and analytics and backed by an award-winning client services team, enable us to help lenders meet the ever-changing challenges of our industry,” continued Haber. “The new security and reliability measures will help mitigate the risk of fraud, streamline processes and improve the customer experience. “