Latest Fraud Trends and Insights

Expert Perspectives: Data Facts Sales Manager, Rory Tipton

Published June 17, 2021

Rory Tipton is the Sales Manager at Data Facts.

Given that mortgage fraud tends to increase in a purchase-driven market, what types of fraud should lenders be on the lookout for in 2021 and beyond? What are some of the red flags that would indicate to lenders that fraud may be on the rise in their pipelines?

RT: In a purchase-driven market, more consumers are applying for first mortgages, thus, more are breaking the rules. Two of the fastest-growing types of fraud are income fraud and occupancy fraud.

Income fraud occurs when an applicant fraudulently misstates their income on a mortgage application. Although many possible cases are caused by applicant errors made in good faith, technology has made it significantly easier for fraudsters to break the rules. Even a simple web search can reveal websites that specialize in generating doctored pay stubs designed to fool lenders.

Occupancy fraud occurs when the applicant lies about whether the home will be occupied. Because lenders typically charge lower rates when the buyer intends to live in the home, many applicants will indicate this on their mortgage application, even when the property is for investment only.

There are quite a few high-level red flags you should be on the lookout for when examining a loan file for instances of fraud. First off, if there are any discrepancies in the social security number or address on the file, consider these major tip-offs of possible fraud. Handwriting discrepancies throughout signed documents, or numbers that are “squeezed in” due to an alteration can also be high-level indicators.

Keep in mind though, finding one or two anomalies in a loan file may not be cause for alarm. However, a file littered with inconsistencies may be enough to declare fraudulent activity.

The Data Facts’ ADV-120 platform evaluates a loan application for fraud in seven key areas. What are those areas?

RT: The core purpose of the ADV-120 Report is to shield you from fraud and loan misrepresentation. It consists of 7 key components, including a summary of findings, along with reports on borrower identification, property history and foreclosures, liens, employer ID, subject property, and mortgage participants. Many of our lenders who use the report love its concise layout, and that the user can quickly refer to the summary of findings, located on the first page. One of my favorite features about the report is its intuitive pass/fail results. Under each of the key components, you’ll find easy-to-read pass (in green) and fail (in red) indicators, which have been proven to reduce review time and errors. In addition to the ADV-120 being the most efficiently formatted report on the market, our customers have also praised their ability to customize the report with only the components they need.

In addition to the ADV-120 report, what are some other key solutions Data Facts offers that can generate process efficiencies for loan servicers?

RT: One of the things we do best at Data Facts is giving our customers the flexibility of evaluating their portfolios in a manner that works for them. We do this by offering a wide selection of products for loan servicers, all of which are huge efficiency-boosters for their organizations. For instance, Data Facts offers a full suite of credit reporting and verification tools in addition to the ADV-120 product. Plus, servicers can verify employment directly through ACES with our VOE integration. All of these additional services come with what we like to call “the Data Facts Difference”- dedicated client support combined with some of the best technology in the industry; So, in a sense, you’re really getting the best of both worlds. This, combined with a seamless ACES integration, gives our customers the satisfaction of knowing they’re pulling reports faster and more efficiently every time.

How has the Data Facts-ACES partnership/integration progressed since its inception? What are the benefits to using an integrated credit reporting service for post-closing QC reverifications?

RT: Since the beginning of our partnership with ACES, we’ve received several inquiries from current customers, as well as new clients who have shown interest in the program. I think this speaks to the simplicity and user-friendliness of ordering through ACES, and it’s definitely a huge value-add. The integration enables users to order, track and receive credit reports from Data Facts without leaving the ACES system, streamlining the quality control audit process and eliminating the unnecessary, time-consuming and error-prone task of rekeying data.

Managing your strategies and maintaining control of your portfolio is key in an ever-changing risk environment. Using an integrated credit reporting service for post-closing QC reverifications gives you timely, accurate intelligence on customer credit profile changes so lenders can make informed decisions and take action.

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