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| December 3, 2007 - Rapid Reporting |
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FBI Report Shows Mortgage Defaults and Foreclosures Linked to Borrower Fraud 70 percent of early payment defaults linked to misrepresentations in mortgage loan applications Up to 70 percent of early payment defaults may be linked to borrower misrepresentations on mortgage loan applications, according to the FBI’s Mortgage Fraud Report. At a time when the industry is focused on finding the source of its record number of foreclosures, this information empowers lenders with the insight that can help them proactively prevent costly mortgage defaults and foreclosures. Lenders that implement fraud prevention programs can protect themselves against mortgage fraud, the fastest-growing white collar crime in the country, while also reducing the number of costly and time-consuming defaults and foreclosures. The study found that mortgage defaults were largely concentrated in adjustable rate mortgage (ARM) loans, but were present among other loan types, too. The report also revealed that seven of the top 10 states with the highest concentration of mortgage fraud were also in the top 10 states for foreclosures, namely California, Florida, Georgia, Indiana, Michigan, Ohio and Texas. “When we talk about the increasing numbers of defaults and foreclosures, we need to really look at the root of the problem, and the FBI’s report has nailed it,” states Jay Meadows, chief executive officer for Rapid Reporting, a national provider of fraud-preventing income and identity verification products and services to the mortgage industry. “While it would be naïve to assume that we could narrow the cause of every foreclosure down to one single factor, this FBI information clearly indicates that borrower fraud plays a significant role in the record number of defaults and foreclosures we’ve been seeing over the past couple of years. The good news is, now that lenders know one of the leading causes of defaults and foreclosures, they can move forward into a solution. Lenders can significantly reduce their number of defaulted and foreclosed loans by implementing a good fraud prevention program.” Mortgage fraud costs lenders an estimated $4 billion per year and identity theft is the fastest-growing segment in the fraud arena. Over 60 percent of all mortgage fraud involves income or identity misrepresentation by the borrower, and according to the FBI, often involves the willful participation of an industry “insider” or other professional. “There’s no denying the detrimental impact of mortgage fraud upon the industry, but with the right fraud prevention program, lenders can proactively protect themselves from falling prey to this rapidly growing crime,” add Meadows. About Rapid Reporting Founded in 1998 and headquartered in Fort Worth, Texas, Rapid Reporting Verification Company is a national provider of award-winning definitive income and identity verification products for mortgage lenders to avert the incidence of fraud. Core offerings include IncomeChek, which is used to verify income through data obtained from the Internal Revenue Service (IRS), and DirectChek, which meets USA Patriot Act compliance and verifies identity via a direct comparison of data to the Social Security Administration (SSA) database and searches of over 15 billion records in public and private databases. Both products operate over a secure, Intranet, Web-based portal, which is audited daily for security purposes. Both products are also available through RapidChek, a web services platform. Rapid Reporting formed and continues to build relationships with government agencies, such as the IRS and the SSA, to gather electronic data for verification purposes. Rapid Reporting’s executive team led the successful lobbying efforts to secure the continuation of the enumeration verification system (EVS) with the SSA database. In October 2007, Rapid Reporting won Mortgage Technology magazine’s 2007 Fix-It Award, which is awarded to a company that solves a critical industry problem. For additional information, email info@rapidreporting.com, call 888.749.4411 or visit www.RapidReporting.com. *2006 Mortgage Fraud Report released in May 2007 PRESS CONTACT: |
| Rapid Reporting by Rosalie Berg, Fort Worth-TX |
