|
Special Reports
Mortgage Fraud
Credit Plus Improving TRV System
Obtaining additional data on potential borrowers.
By Brad Finkelstein
Credit Plus Inc. here is in the process of rolling out a number of enhancements
to its tax return verification system.
Included in the improvements is the ability to electronically order and receive
any TRV service. "It's estimated that mortgage fraud has increased by 500% over the past three years,"
says Allen Johnson, vice president of sales and marketing for Credit Plus. "TRV is a great way to lower those
statistics. Through these enhancements, clients will obtain additional knowledge on their potential borrowers."
Until now, lenders had to submit a signed Internal Revenue Service Form 4506-T
release form via fax to Credit Plus in order for the company to pull the borrower's tax return. While the form
still has to be signed, those lenders with imaging or scanning capabilities can send an electronic file to Credit
Plus.
There are "inherent problems" with faxing documents, Mr. Johnson said.
The reason why it pursued this technology, he said, was because it removes "an ongoing frustration for our
clients."
Another advantage of the electronic service is that it saves time in getting the
underwriter this information, allowing the file to be turned around that much quicker.
Part of the underwriting process is filling out a Fannie Mae Form 1084, a cash-flow
analysis of the borrower. This is a worksheet that lets the underwriter see what portion of the borrower's income
is likely to reoccur on an annual basis, giving the underwriter a more definite income figure to base their decision
on.
But, Mr. Johnson pointed out, this is a time consuming process to fill out this
"complicated" form. In an effort to simplify and speed the process as well as decreasing the likelihood
of fraud, Credit Plus is introducing TRV Cash Flow Analysis. The new product completes all the calculations automatically
using IRS-verified data. Typically the underwriter uses the borrower's tax return submitted with the mortgage application
to fill out the 1084. Borrowers have been known to change information on the submitted form to reflect untrue data.
The fact that the data are automatically added together cuts down on the possibility
of human error, he said.
In some quarters, no-asset, no-income verification loans are called "liar
loans." Credit Plus offers a product to lenders seeking to prove the plausibility of the borrower's statements.
The company has made enhancements to its TRV Stated Income Reports. In the improved
version, Credit Plus now gives lenders the employer's identification code, which is used by the Social Security
Administration to identify businesses. It also now provides the NAICS code, which identifies which industry the
employer is in.
Another new piece of information that will be provided is "First Time Scheduled
C Filed: Yes or No."
This schedule is used for self-employed borrowers and the question answers if
the borrower is filing this form for the first time in any of the year's being searched.
Credit Plus also added the capability to research the person filing with the self-employed
income on Schedule S/E SSN.
Part of the catalyst for these enhancements in the stated-income products has
been the increase in popularity among borrowers for these products, Mr. Johnson said.
|
