A need for quality controlRon Littquality control, Far West Credit Inc.,
In light of the recent findings and fines charged by the Federal Trade Commission (FTC)
concerning the credit reporting company Far West Credit Inc. not
following reasonable procedures to assure the accuracy of the
information on consumer reports, credit reporting companies,
lenders and brokers need to be on alert. Why? Mortgage fraud is
running rampant. It's everywhere in the industry. It's not only the
borrower getting the raw end of the deal either. Ninety percent of
mortgage fraud is due to an insider - someone in the mortgage
business - be it a broker or even a lender. Lenders, brokers and
borrowers need protection for their business and themselves, but
what's being done to provide it? Will this continue to
happen?
Fortunately, more and more mortgage fraud cases are being caught.
Unfortunately, most are after the fact. In a recent case, Far West
Credit Inc. accepted incorrect information from interested parties
to show the consumer's credit status with businesses such as cable
companies, utilities and insurance companies and added it to the
consumer's credit report. The information Far West received was
incorrect and not adequately verified, resulting in charges from
the FTC.
The key to preventing mortgage fraud lies in quality control. If
Far West had a checks and balances system in place, the company
would not have to pay the settled FTC charges. Anyone, including
your co-workers, can create fraudulent credit reports that can pass
for the genuine thing if there are no operations procedures, record
keeping or requirements to assure maximum accuracy. A quality
control and assurance department is absolutely necessary for this
very reason. In an industry that is trying to find better ways of
funding underserved or unbanked markets, news like this puts a
strain on support for progressive credit alternatives. A lack of
quality control damages the potential growth and interest in new
products and services for the underserved, and it costs the
industry millions of dollars in new revenue and losses because of
fraudulent loans. Payment Reporting Builds Credit (PRBC) recognizes
this and is the first-ever credit bureau to provide the industry
with a tool to help fund the unbanked markets. PRBC demonstrates
the creditworthiness of rental and other bill payments while
providing verification partners to review and ensure that all
information is correct.
"PRBC allows only the consumer to provide payment information
and assures the reliability and quality of historical data that is
provided by utilizing Fair Credit Reporting Act-certified
specialists from verification partners such as Advantage Credit,"
said Matthew Vitko, PRBC director of business development. "These
specialists verify Social Security number, current address,
historical lease, mortgage, utility, phone, cable and other
recurring bill payments, along with judgments and collection
accounts. PRBC's procedures for historical verifications meet and
exceed the requirements of the FTC, HUD, FHA, VA, Fannie Mae,
Freddie Mac and secondary markets for both consumer and business
credit."
With mortgage fraud on the rise, it is reassuring to know that
industry leaders are setting a standard of enforcing quality
control measures. Brokers and lenders need to take quality control
seriously and not on the back end of the process, when it is too
late. If everyone, including reporting companies, brokers and
lenders, takes proactive steps, I believe that we will see a
decline in this criminal act of mortgage fraud.
Ron Litt is president of Pensacola, Fla.-based Advantage Credit
International and an industry veteran with more than 41 years
experience in the information and mortgage industry. He can be
reached at (800) 600-2510 or e-mail at
[email protected].
