Rapid Reporting Verification Co. and Magellan Lender Services LLC will partner to provide lenders with a one-stop identity and collateral verification service to combat mortgage fraud.
Under an agreement announced Monday, Magellan will verify collateral information submitted on loan applications, and Rapid Reporting will provide borrower-related verifications using IncomeChek, the company’s income verification tool, and DirectChek, Rapid Reporting’s identity verification application.
According to an industry database, there was a 30 percent increase in loans involving suspected mortgage fraud in 2006. The most common type of fraud involved falsified employment histories and exaggerated income, the Mortgage Asset Research Institute reported.
Magellan’s cascading automated valuation model enables users to get maximum hit rates and valuation accuracy needed to effectively detect fraud, the company said in a press release.
Rapid Reporting’s IncomeChek confirms and verifies borrower income against tax return, W-2 and 1099 data acquired directly from the IRS, and DirectChek authenticates Social Security numbers by searching the Social Security Administration’s database and 15 billion records in public and private databases, the company said.
In a separate announcement Monday, Rapid Reporting said its Stated Doc Report will now provide IRS-verified data indicating whether borrowers have filed a tax return for each of the past two years; confirm Schedule C and Schedule E filings; verify the Social Security number of the self-employed individual listed on the tax return; and provide the North American Industry Classification System (NAICS) code of the self-employed individual’s business and a description of the NAICS code category.
Stated-income and subprime underwriting guidelines often require a letter from a CPA to establish that a business has existed for the past two years. Rapid Reporting said obtaining the same information, with more details, straight from the IRS, is a safeguard against fraud. As a third-party source of information, Rapid Reporting has “no stake in whether the information aligns with the information stated on a loan application or not,” the company said.
No actual numerical data is released in Rapid Reporting’s Stated Doc Report, “so the integrity of stated-income loans can be maintained.”
Originators must require execution of IRS form 4506T, the “Request for Copy or Transcript of Tax Form” that enables a third party to receive copies of tax returns directly from the IRS for as far back as four years. Rapid Reporting obtains the tax transcripts from the IRS and completes the Stated Doc Report certifying the content is from IRS data.