Interthinx offers robust analytics to detect mortgage loan occupancy fraud and undisclosed properties – NMP Skip to main content

Interthinx offers robust analytics to detect mortgage loan occupancy fraud and undisclosed properties

National Mortgage Professional
Mar 24, 2014

Interthinx offers robust analytics to detect mortgage loan occupancy fraud and undisclosed propertiesMortgagePress.comInterthinx, FraudGUARD, ownership misrepresentations, risk mitigation, mortgage fraud prevention

Interthinx Inc., a provider of proven risk mitigation, mortgage fraud prevention, and regulatory compliance tools for the mortgage industry, announces a new module available through FraudGUARD to identify and manage potential occupancy and ownership misrepresentations in loan files. The module includes an unparalleled analysis of a borrower's history of property ownership and critical new alerts within the proven FraudGUARD scoring system. Interthinx customers are able to detect undisclosed properties that can skew debt-to-income ratios, and discover investors who falsely claim owner occupancy status in loan applications. Detection of these misrepresentations gives lenders the opportunity to investigate and avoid mispricing loan products before a loan is funded.

"Borrowers misrepresenting occupancy status is one of the most common types of mortgage fraud, representing slightly more than 10 percent of the applications scored by FraudGUARD as 'high risk,'" said Stacey Louie, senior vice president of product development and engineering for Interthinx. "Our supplementary data set allows for nationwide searches of borrower-owned properties, and our exception-based alerts help our clients discover other borrower property liabilities. Occupancy issues are identified, as well as seller carryback financing, foreclosures, and unidentified addresses used by borrowers. All of these are indicators of potential fraud, which cannot be tolerated in this market."

Occupancy fraud occurs when borrowers try to disguise an investment property by representing it as the primary residence. Because lenders typically charge a higher interest rate for non-owner-occupied properties (which historically have higher delinquency rates), the false representation results in the lender underestimating the risk, mispricing the loan, and being overexposed to loss.

Inaccurate borrower debt-to-income ratios can stem from undisclosed properties. Since debt-to-income ratios are a crucial underwriting criterion used to determine eligibility for most mortgage loans, misrepresenting occupancy and omitting other borrower-owned properties artificially lowers the debt ratio, which can lead to a borrower fraudulently qualifying for a larger loan or a lower interest rate.

The new occupancy and ownership module of FraudGUARD analyzes detailed borrower ownership data from deed and assessment records and helps lenders assess a borrowers ownership history with interactive timelines.

"The analysis and underlying data provided is not only the most comprehensive in the marketplace, but is the easiest to use because the format was designed to promote operational efficiency," concluded Kevin Coop, president of Interthinx. "One of our many goals is to consistently provide our customers with crucial and digestible data to help them make the most informed lending decisions based on borrower activity."

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Mar 24, 2014