Lenders Look to Prevent Mortgage Fraud Before Origination With New Software
In the market for mortgage finance, more and more lenders are pushing fraud detection to front of the mortgage food chain. Several lenders and software companies are joining forces to try to get a better jump on potential borrower deceit by implementing pre-origination mortgage fraud prevention systems. Wells Fargo (WFC) recently implemented mortgage fraud detection software, called LoanSafe Fraud Manager and developed by First American CoreLogic. At least 10 other lenders are following Wells' lead and testing out the software to see how well it works against their current systems. The LoanSafe Fraud Manager scans the First American property and loan database for pattern recognition. Patented models then assign a fraud risk score from one to 999. The higher the score, the more risk involved. According to First American, the software reduces false alarms and allows lenders to review the most threatening loans before funding. "LoanSafe Fraud Manager offers three important economic benefits critical to lenders today: cost reduction, cost avoidance and revenue increase," said Tim Grace, senior vice president of fraud analytics at First American CoreLogic. Additionally, Wolters Kluwer Financial Services launched its Wiz Sentri Financial Crime Control platform this week. According to Wolters, it helps financial institutions avoid losses by detecting the risk of fraud. The software allows banks and other institutions to create and update profiles of customer, employee, account and transactional activity. Whenever the program finds suspicious behavior or transactions, it notifies the institution to prevent the crime from occurring. It specifically targets money laundering, wire or payments fraud, online fraud, identity theft, and check kiting – where a customer covers a bounced check from one bank with a bounced check from another. "In today's soft economy, financial institutions can't afford the monetary and reputational losses that accompany financial crimes," said Tom Leuchtner, director of the financial crimes business unit at Wolters Kluwer Financial Services. "By investing in a combined anti-fraud and AML [Anti-Money Laundering] solution with technology that actually enables a preventative approach, they can stop these crimes from occurring, realizing a substantial return on investment in terms of preventing financial losses and maintaining the trust and confidence of their customers." Write to Jon Prior.