Fraud Detection Tools

Mortgage fraud has now reached epidemic proportions globally and Australia is not immune:

1. Over $300 of every loan in the US is lost to fraud #
2. 1 in every 100 loans results in financial loss due to fraud #
3. Up to 25% of all mortgage insurance claims in Australia could be fraud related #

There is a growing recognition in the mortgage lending industry that risk assessment procedures can be improved. Losses due to fraudulent misrepresentation are mounting rapidly, and any response to this threat should occur at application assessment time - i.e., prior to funding. Given the pressure on brokers, valuers and agents to maintain income, information provided to lenders is becoming less reliable and in some cases fraudulent.

RP Data can assist you with the following:

• Stop funding fraud and early payment defaults before the mortgage is settled
• Risk score in real time so that there are no delays to service levels
• Identify genuine ROI and loss reduction
• Save processing costs
• Minimise fraud with no capital costs, no maintenance costs, no licensing costs and no software installation

Mortgage fraud detection technologies are now feasible and fast becoming an essential risk mitigation tool. Two products have emerged as market leaders - 'FraudMark' from BasePoint and 'LoanSafe' fromFirst American Core Logic™. These technologies provide significant benefits to the finance industry.

RP Data has brought together these two leading US mortgage fraud products for the Australian and NZ markets. RP Data’s significant property information expertise will assist in delivering both collateral risk scoring and the patented analytic pattern based fraud & early payment default risk scoring. This complete risk assessment is delivered to clients via a secure internet service.

Net losses over a one year period for a major lender were analysed. It was found that approximately 2% of loans accounted for almost 40% of net losses. Finding them in the past has been the "needle in a haystack" challenge.

Credit scoring, no matter how detailed, cannot find these fraud losses. Credit scoring only focuses on the applicant. In most cases of fraud, and many cases of early payment default and collateral risk, the applicant's credit history holds no predictive indication of the likelihood of loss. Brokers, some of whom are responsible for these losses, are skilled at credit procedures and can effectively guide high risk applications through the credit process.

Risk scoring each loan requires minimal effort by the lender/insurer and can be run overnight or in real-time to best suit each customer. As part of the evaluation stage, RP Data can risk-score loan applications to show lenders actual results, allowing customers to calculate an indicative ROI.

If you would like to speak to a Fraud Specialist email  This e-mail address is being protected from spambots. You need JavaScript enabled to view it or submit an enquiry through our contact form.

# Source:

1 & 2. US FBI Mortgage Fraud Findings (Published in 2007), original data sourced from The Preston Group 2006.

3. APRA Half Year General Insurance Bulletin 2008 and information sourced from LMI investigators.