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Detect & Minimize Loan Risks Amid Higher Volumes

September 28, 2020  //  BY Team DataTree

Mortgage rates may have declined in recent months, but the volume of loans that mortgage companies are handling only continues to grow. Amid a rush of buyers who are eager to purchase and refinance homes, mortgage lenders have found themselves stretched thin in an effort to both keep up with these demands and keep an eye out for any potential loan risks.

In light of COVID-19 and its subsequent complications for the housing industry, mortgage lenders recognize the need for reliable tools to detect fraud early in the mortgage lifecycle and protect their biggest asset: their loan portfolio. FraudGuard by First American is designed to do just that.

FraudGuard Proactively Reduces Loan Risks

FraudGuard is a comprehensive support tool that pairs best-in-class data with real-time due diligence to address key loan quality issues and ensure compliance with industry regulations. With an extensive inventory of data and analytics — focused around identity, occupancy and property ownership (among other factors) — and a highly customizable environment to suit specific needs, FraudGuard helps lenders efficiently and accurately assess loan risks in various areas of the mortgage lifecycle.


In response to COVID-19, government-sponsored enterprises (GSEs) have enabled lenders to provide short-term forbearance to borrowers on payments. While this shift offers economic relief to those who need it, these forbearances can strain liquidity for non-bank lenders and also prompt borrowers who do not qualify for forbearance to try and skip loan payments. With employment and income alerts, FraudGuard can help lenders verify if borrowers do quality for forbearance.


In an effort to persuade a financial institution to modify or refinance their loan under more favorable terms, borrowers will sometimes report false income information. While refinancing or refi risks have always been a concern for lenders, the temporary suspension of the IRS 4506T services due to COVID-19 has increased the risk of fraud. FraudGuard is equipped with FLEX (FraudNet Loan Exchange Review) so lenders can identify anomalies in areas like income and also check for multiple credit inquiries.

Verification of Employment

GSEs have eliminated the original guidelines for VOE, and now will now accept paystubs and banking statements instead to verify employment. However, most lenders still require a verbal VOE to supplement these documents. With FraudGuard, lenders can allow alerts for applicable online businesses so that their contact information remains up-to-date.

Loan Slamming

Stay-at-home orders and social distancing guidelines have affected the operations of recording offices, and subsequently created more gaps. In some cases, borrowers can use these gaps to their advantage — what’s known as loan slamming. Lenders can use FraudGuard to check for multiple open applications/orders as well as multiple credit report inquiries.


With the growing authorization of remote online notarization (RON) across different states, identity verification becomes all the more important. While FraudGuard cannot verify identity for RON, this tool can enable applicable borrower identity alerts that help confirm the validity of identity information at an early stage of the loan process.

See potential for FraudGuard in your lender operations? Talk to one of our experts and see how we can help your business ensure loan quality throughout the mortgage lifecycle.



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