- Losses on all home equity loans, including home equity lines of credit (HELOCs) and junior home equity liens, rose from $901 million in the second quarter of 2007 to $5.6 billion in the second quarter of 2008 — more than a six-fold increase. Source: SNL Financial and Early Warning research.
- Approximately 81% of all mortgage fraud is committed with the knowledge and often the participation of an industry insider. Source: Leading industry analyst and fraud expert Richard Beidl of ImpactPartners, Inc.
Consumer Lending
HELOC and Mortgage Fraud Prevention
Financial services organizations reported nearly 53,000 cases of suspected mortgage fraud in 2007, up from more than 37,000 a year earlier and about 10 times the level of reports in 2001 and 2002, according to the U.S. Treasury Financial Crimes Enforcement Network. In addition, over the last few years, billions upon billions of dollars were extracted by homeowners in the form of home equity loans that are now less secure and generating huge losses due to decreasing home values. In response to these industry challenges, financial organizations across the country have tightened their lending standards. Yet mortgage fraud remains a big threat.
Due to the growing number of insider fraud cases in the mortgage arena, organizations also benefit from being able to determine whether or not a loan officer has committed fraud at another financial services organization. Early Warning offers a service that helps identify job applicants and employees who were released by participating financial services organizations because they knowingly caused or attempted to cause financial loss.
Early Warning solutions help reduce losses by determining if:
- a remittance payment is from an account that is open and in good standing
- if the borrower is authorized to transact on the account on which a remittance payment is drawn
For more information on how Early Warning can help prevent HELOC and mortgage fraud, please see PAYMENT CHEK® service and
Internal Fraud Prevention service or contact us.
Source: Financial Crimes Enforcement Network Updated Mortgage Fraud Report, April 2008