Equifax has formed a relationship with Interthinx, a Verisk Analytics company, to give financial institutions visibility into the underwriting process. Interthinx clients can now seamlessly access Equifax's Undisclosed Debt Monitoring solution through FraudGUARD to address investor and lending requirements and uncover undisclosed debt—a multi-billion dollar challenge in the mortgage market. Through this relationship, mortgage originators, investors and insurers benefit from enhanced risk mitigation, reduced fraud and fewer loan buybacks.
"As we begin to emerge from the economic downturn, the mortgage industry must look for solutions to key factors that led to the mortgage crisis, including borrower misrepresentation," said Chris Mayer, a professor of real estate at Columbia University. "While lenders have addressed many of the risks of originating new mortgage loans, such as stated income mortgages, they must also consider a borrower's changing circumstances prior to closing. In the future, lenders should be keenly aware of new innovations and solutions that can help them close loans with better credit controls in place."
This relationship represents Equifax's latest effort to equip the mortgage market with a best-in-class solution. Undisclosed Debt Monitoring is the mortgage industry's first platform to monitor for and notify financial institutions of new accounts and borrower activity initiated during the "quiet period," which spans from the application date to the mortgage closing. A solution that is "always on," Undisclosed Debt Monitoring alerts lenders of borrower activity that may represent risk associated with mortgage loans in their pipelines. By integrating Undisclosed Debt Monitoring into Interthinx's FraudGUARD technology, lenders can increase their ability to address compliance requirements with a single platform.
"Our research shows that $43 million in auto loan payments were potentially overlooked during mortgage underwriting in the first three quarters of 2010. Through our relationship with Interthinx, we have made it easier than ever before for mortgage lenders to access unique industry solutions that help them identify this type of hidden debt," said Steve Meirink, Equifax Mortgage Growth Initiatives Leader. "Teaming with Interthinx, a proven leader in mortgage fraud detection, has created another way for financial institutions to make better underwriting decisions."
FraudGUARD is considered the industry's most comprehensive evaluation tool to help lenders and investors mitigate mortgage fraud, reduce repurchase risk, satisfy regulatory demands and improve loan quality. Its proven, pattern-matching analytics measure and score fraud risk against public, private and proprietary data sources. Leveraging a network of data and state-of-the-art technology, FraudGUARD validates borrower information and interprets loan application data to uncover potential fraud and buy-back exposure.
"The Interthinx mission has always been to mitigate risk, eradicate fraud and support lender compliance, and we've worked diligently to develop award-winning solutions to accomplish that," said Kevin Coop, president of Interthinx. "Working together, our technologies will be profoundly more effective based on access to more data and a shared desire to innovate around operational efficiencies for the residential mortgage lending community. Through the collective teamwork of Interthinx and Equifax, we will be better positioned to proactively provide lenders the compliance and risk support they need while streamlining their internal processes."
As part of current investor and lending requirements such as Fannie Mae Loan Quality Initiative (LQI) guidelines, mortgage lenders may be accountable for any new debts that a borrower has incurred prior to closing that may impact their ability to fulfill a mortgage payment obligation. Under these guidelines, a loan may be subject to repurchase if any debts or liabilities incurred during the underwriting period are not reflected on a credit report or disclosed in the final loan application. According to Fannie Mae loan reviews completed through the end of January 2011, undisclosed liabilities continue to represent the leading type of significant misrepresentation—comprising 24 percent of all 2009-2010 originations.
To address these guidelines and mitigate loan buy-back risk, the integration of Equifax Undisclosed Debt Monitoring into FraudGUARD enables financial institutions to:
►Quickly identify potential borrower misrepresentation or undisclosed debt early in the loan origination process.
►Streamline the underwriting process, resulting in significant time and cost savings for the lender and fewer last-minute document requests for the borrower.
►Easily customize a compliance program to fit within existing production workflow and address specific credit policy and guideline procedures.
►Leverage a single, user-friendly report that includes Undisclosed Debt Monitoring analysis.
For more information, visit www.equifax.com or www.interthinx.com.