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Special Reports
Mortgage Fraud
Bundled Services Could Be Protection or a Risk
'The entire bundle needs to be secured.'
Amilda Dymi
As bundled services become more and more popular, highly secured exchanges of
information between lenders, vendors, borrowers and other parties in the mortgage transaction provided by these
services may be either risky or one of the best solutions against fraud and identity theft, experts say, if the
mortgage industry takes full advantage of this option.
Dave Black, president of SharperLending LLC, a 17-year-old credit processing company
whose expertise is in securing the privacy of sensitive transactions and on average operates about 600,000 credit
reports monthly through its secure online platform, is one industry insider who thinks the mortgage industry at
large still does not handle bundled services platforms in a secured way.
Despite the lack of RESPA reform and federal regulations, SharperLending said,
"bundled services platforms continue to spread throughout the mortgage industry," serving as a key tool
in streamlining the origination process and offering the potential for fraud protection. "People e-mail back
and forth, loan officers may be running their software on laptop sitting somewhere, they may lose their laptop,
and generally there is no way to secure that information, especially considering that there's a bunch of credit
reports sitting on it," he said. "Or they may hop on a wireless network and hit the hard drive, but if
you haven't turned on your firewall, those credit reports are out there. So when we created SharperLending it was
to allow our loan officer to aggregate to have the one-stop-shopping experience in an environment deserving of
the information that we're gathering and have a great level of security attached to it."
SharperLending said it continues to add new features to the platform, including,
most recently, a link to Freddie Mac's automated underwriting.
SharperLending's goal, Mr. Black explained, is to initiate and keep the entire
loan process in a very secure environment, since "nowadays we have become too portable and have opened our
systems up too much to a level that now requires a higher level of security," considering the types of transactions
processed in the mortgage industry, otherwise the data are at risk of being compromised.
The SharperLending service is free to the lender since it is a vendor-sponsored
platform. So stepping up to higher level of data security, he said, it is at no cost to the lender in times when
the mortgage industry is facing the challenge of avoiding fraud. "In my opinion, the entire bundle needs to
be secured because you need to look at the credit report any time you're going to decide whether the deal works
or not," the executive noted. "Everything in the decisioning process should be secured to the highest
level possible, which is that of the credit information."
One important benefit bundled services offer, Mr. Black noted, is the security
achieved by handling all the origination-vendor communication online. "For example, currently loan officers
access vendor services and still store that data in the hard drive," he said. "The SharperLending platform
allows them to create the virtual loan folder online, with all of the services, including Fannie Mae and Freddie
Mac decisioning, so it's not just getting an appraisal, a title and closing docs, it's also about getting Fannie
and Freddie automated underwriting decisions and everything remains with SharperLending."
Since it is not required to store the data in the user's hard drive, or e-mail
it to the processor, instant access to information is available as it remains in a secured environment within SharperLending.
However, he noted, many in the mortgage industry still prefer the one-stop-shopping experience operated through
their hard drive "and that simply is not secure." The company has built a platform that will not only
allow users to build their communication, he said, but also originate the loan, get a Fannie or Freddie approval
on it, in a secured way, which is the best way to fight identity theft.
In addition, he finds it interesting that most mortgage companies are concerned
about data security and laptops, because they are very portable and easily can get lost. "But we're not securing
our desktops either. A kid who's trying to steal some music may open up a portion of your hard drive to be accessed
by anyone else who's part of the same network service ... that means running a risk," he said. "The level
of security we are putting in our laptops and desktops is crucial."
A crack in the network connection has the potential to put out there very sensitive
information such as credit reports. "Today very sensitive information may be shared out unless necessary precautions
are taken to safeguard data gathered in a full loan application," he said. "Primarily, what is at the
core of a platform like this is the higher level of security that benefits the borrower."
It also benefits the lender, he said, although if lenders receive files from brokers
they need check the accuracy of the data, so SharperLending allows for the loan to move from the broker to the
lender without it ever leaving the SharperLending system, which secures the integrity of the information transferred
between users. "We have security for identity theft, we facilitate data transfers from one party to the next,
and thirdly, if the information comes in from the borrower after using an appraisal relationship," he added,
SharperLending can screen the appraisal for quality assurance using an automated valuation model. Electronic filing
helps eliminate the probability of mistakes and leaking of secure information that comes from using paper documents.
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