This year’s fraud forecast is looking pretty bleak.
Last year, CoreLogic’s analysis of mortgage fraud trends predicted that Q3 of 2016 could represent the highest rate of mortgage fraud since 2010.
And here we are in Q3. George, George, George mortgage lender, watch out for that tree!
But in all seriousness, it is vital for the mortgage banking and title insurance industries to take a hard look at their policies and procedures for preventing fraud. It can be the difference between success, and becoming another statistic in the National Fraud Index a year or two from now.
There are several types of fraud to be on guard against in the mortgage industry. Two of the biggest risks are outlined below, along with how ATS Secured can protect your mortgage business against them.
Wire Fraud Risk.
We’ve talked about wire fraud before, but here’s a recent, real-life example. On August 18, a Massachusetts mortgage company founder was indicted on conspiracy and wire fraud charges for diverting nearly $3 million in loan payoffs and escrow funds into secret accounts for personal use.
The ATS Secured Network mitigates this risk by allowing only vetted and verified individuals and companies to disburse funds. We also track distributed funds, ensuring that monies go where they are supposed to (and not to a fraudulent account, for instance).
Identity Theft. Or Rather, New Account Fraud.
There’s a new scam in town: new account fraud. According to a Javelin study, new account fraud is up 113% (representing 20% of all reported fraud losses) and will continue to climb 41% each year.
EMV chips are good at mitigating in-person fraud, but that has only sent fraudsters online to commit new account fraud. Fraud analyst Frank McKenna writes, “New Account fraud is already up an additional 10% since EMV went live in the U.S. last October.”
To make matters worse, the mortgage and banking industries don’t seem to recognize this new account fraud—even after the fact.
Al Pascual, research director and head of fraud and security at Javelin, explained in an American Banking article:
“When we talk to our bank clients about application fraud and identifying true-name fraud versus synthetic IDs, they have a hard time even distinguishing if they’re dealing with fraud in the first place, much less whether it’s a synthetic ID. Often, banks and issuers will charge off these accounts and label them as a credit risk issue. Unless that consumer or law enforcement calls them and says that wasn’t me and can prove it, they’re not going to stamp it as fraud.”
ATS Secured helps prevent identity theft, and specifically new account fraud, by ensuring that every user, both at the individual and company level, are truly who they say they are. In effect, we stop this kind of fraud in its tracks.
Contact us today to learn more.