A new feature through Ellie Mae‘s Encompass360 loan origination platform designed by CoreLogic (CLGX) aims to reduce repurchase risk on agency loans by assessing fraudulent information before a mortgage is originated. CoreLogic Credco’s FinalCheck now functions as part of Ellie Mae’s mortgage management platform. The system launched in November in an effort to assure mortgage origination compliance with government standards, more specifically Fannie Mae‘s standards. The first piece of the three-part suite performs a gap analysis on credit information between preapproval and prefunding. The second system is AppCheck, which searches against proprietary CoreLogic loan application databases and the Mortgage Electronic Registration Systems, or MERS, for undisclosed loans. FraudCheck is the final part of the suite and verifies that neither the borrower or loan participants are on a Department of Housing and Urban Development or other investor exclusionary list. “FinalCheck plays a critical, proactive role in monitoring debt-to-income ratios and other loan risk factors that could surface just prior to loan submission,” said John Bauer, senior vice president of credit and transportation services for CoreLogic Credco. The suite “allows mortgage professionals to make fast, LQI-compliant lending decisions that help avoid loan buybacks and increase loan delivery confidence.” Repurchase risk on loans backed by government-sponsored enterprises has been a hot button issue since the housing bubble burst a few years ago. FinalCheck is an elective, paid service from Fannie, but is highly recommended by the agency to reduce repurchase risk. Fannie Mae and Freddie Mac recently settled repurchase claims with Bank of America (BAC) for about $3 billion. A $462 million settlement with Ally Financial preceded BofA. Investment bank Keefe, Bruyette & Woods estimates total GSE repurchase claims will hit $33 billion. Pleasanton, Calif.-based Ellie Mae recently filed for an initial public offering of its stock. Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.
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