Industry News

Software touted as tool to uncover mortgage fraud

BasePoint's BrokerWatch uses pattern recognition technology to flag suspicious loans

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When mortgage fraud schemes unravel, their lack of sophistication is often surprising. Borrowers' incomes may have been falsified and property values grossly inflated, but nobody seems to notice anything's amiss until the loan payments stop coming. Banks routinely open their vaults and make bad loans based on false information provided by real estate professionals, including mortgage brokers, appraisers and closing agents. Because they handle a tremendous volume of applications, it's difficult for human loan officers to spot trends that could indicate a loan application or mortgage broker deserves closer scrutiny. Using pattern-recognition techniques employed by the credit card and insurance industries, Carlsbad, Calif.-based BasePoint Analytics claims to have developed software that can help lenders and mortgage firms identify problem brokers and problem loans.  Only a small percentage of brokers intentionally submit bad information or engage in fraudulent activity, it seems....