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Executive Conversations is a HousingWire web series that profiles powerful people in the financial industry, highlighting the operations and the people that make this sector tick. In the latest installment, we sit down with Jim Mortensen, vice president of Identity Solutions for Early Warning, to find out how bringing automation to asset location and verification improves the loan process for borrowers, lenders and the government-sponsored enterprises (GSEs).
HousingWire: What risks do lenders face when they rely on borrowers to provide asset verification during the loan process?
Early Warning: The risk for fraud increases dramatically when lenders rely on borrowers to provide accurate, timely asset information, which is crucial for responsible underwriting. Mortgage fraud schemes that use false documentation are unfortunately all too common. Paper documents are much more easily forged with the technology available today at criminals’ fingertips, so fraud risks skyrocket when lenders use paper-based processes to collect asset information.
Despite lenders’ best efforts, this risk seems to be growing. Loosening credit guidelines and a recovering housing market are expected to increase the opportunities and motivation for origination fraud, particularly through inflated sales prices to cover down payment misrepresentation. CoreLogic predicts that this year mortgage fraud risk could reach its highest rate since 2010.
HW: How does Early Warning’s Asset Search and Verification Service for Home Loans address this risk for lenders?
EW: Early Warning’s Asset Search and Verification Service for Home Loans — ASV— uses a collaborative business model to systematically locate and verify assets for financial institutions. Our data is directly contributed by financial institutions, versus being aggregated or screen-scraped, or requiring lenders to ask consumers for banking credentials. Information is also disclosed in a completely transparent fashion under the FCRA.
Lenders provide Early Warning only a person’s name and Social Security number
— bank account numbers aren’t needed since Early Warning can locate all relevant accounts and verify the assets within them, removing the potential for human error or fraud.
HW: What data is ASV leveraging to provide asset verification?
EW: Early Warning leverages its National Shared Database Resource, the industry’s most current, accurate source of collaborative data, to provide account locations, status of ownership and balance history on borrower accounts. Using this verified data allows loans to travel seamlessly through the origination process and into securitization.
This collaborative database includes bank-contributed checking, savings, money market, CD, and IRA account location, ownership and up to 90 days of account history from financial institutions across the country.
This accuracy and quality of this data is a game-changer for lenders. It not only allows us to see information across institutions, but the data is updated daily, providing the current status of any borrower assets, rather than relying on a static screen-scraping approach.
HW: How can lenders give consumers a better experience by using ASV?
EW: We all know that borrowers want a faster, easier mortgage loan process. A recent study by Bain & Company found that an easy and efficient process drives customer loyalty, and it’s easy to see why: consumers increasingly expect financial institutions to provide the same kind of convenient, digital experiences they are used to in other areas of their lives.
Leveraging ASV means that once borrowers provide authorization, their part in the asset verification process is done. Our solution relieves the burden from borrowers by sourcing information directly from financial institutions. Consumers no longer have the responsibility of manually locating account numbers, bank statements and other documents, and it saves them the hassle of transmitting those documents to the lender.
The service also allows for faster closing, since the documentation that would take an underwriter weeks to sift through and evaluate is now delivered in minutes.
HW: Do the GSEs recognize the value in ASV?
EW: Yes! GSEs see the value of ASV. Solving the asset-risk verification process improves the entire loan cycle, because the GSEs don’t have to develop an additional manual process to validate and QC them. It saves them from having to re-validate the information that the lender has already spent time validating.
ASV assigns an Asset Response ID that travels with loans into securitization, which creates a clear view into the loan quality without using additional resources to look through paper documentation. ASV for Home Loans simplifies the mortgage origination and securitization process for lenders, borrowers and the GSEs.
To learn more, download Early Warning's white paper.
