Kroll Factual Data Inc. has reported that more than 14 percent of the loan files processed by Kroll in 2011, and in the first quarter of 2012, contained certain applicant-provided information that suggested the possibility of fraudulent activity. Using its proprietary risk analysis and verification engines, Kroll Factual Data determined these files triggered alerts that could indicate the presence of mortgage origination fraud, resulting in reputational damage and/or increased costs of doing business for lenders and other mortgage providers.
“It is important for mortgage lenders to have the right tools to identify potentially fraudulent activity, thereby enabling them to better understand the actions that can be taken to reduce the risks and costs associated with having to repurchase loans,” said Rod Bazzani, president of Kroll Factual Data. “Our suite of risk solutions provides a market-tested, cost-effective method for mortgage lenders to reduce risk and mitigate the chance of having to incur such costs.”
Kroll has developed, and continues to refine, advanced proprietary algorithms—deployed through its risk analysis and verification engines—that assess applicant-provided information for the potential indicators of fraud. These engines are fully customizable, allowing clients to tailor the algorithms to reduce the number of false alerts. For example, after a national lender worked closely with Kroll Factual Data to customize its alert criteria, which included removing alerts for data entry and similar administrative errors, this lender realized a significant decrease in its average alert review rate—from 8.5 percent in 2011, to less than seven percent in Q1 of 2012.
Typical fraud alert variables would include a “no match” result (on a Social Security Number verification), a potential “straw buyer,” a positive match against the Office of Foreign Assets Control list, etc. In all, there are more than 300 fraud alert factors that could be flagged for additional review.
“Our goal is to empower financial services companies with the mortgage-related information, processes and risk mitigation tools they need to confidently make decisions to support their business objectives,” said Bazzani. “Our proprietary risk analysis and verification solutions are exactly what mortgage lenders need to thrive in today’s challenging and volatile mortgage lending environment.”