Data Facts Blog


Partners Against Crime. Data Facts Helps You Combat Lending Fraud.

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The prevalence of mortgage fraud is still a scary fact.

According to the FBI, 13 billion dollars were lost in fraudulent mortgage loans in 2012. Over 60% of mortgage fraud includes ID discrepancies and in most cases the fraudster uses a mixture of accurate and “borrowed” information. These crooks operate this way hoping that lenders will not check every bit of information and the loan will be approved.

Luckily, there are reports available to mortgage lending companies to combat this issue, and offer some protection. This can help preserve the bottom line.

Fannie Mae, Freddie Mac and the CFPB are continuously working to stay a step ahead of these people. In order for them to stay ahead of the game, they are constantly changing regulations. That makes it difficult for lenders to keep track of these constantly changing regulations. They are requiring that lenders have a rather robust process for assessing the quality during the loan origination.

A member of the board of directors for the National Consumer Reporting Association (NCRA) and Executive Vice President of Data Facts Inc, Julie Wink, explains it. “Fraud is a big issue in the lending world, and it isn’t going away anytime soon. Data Facts strives to offer our customers the solutions they need to close their mortgage loans. Our fraud products are an easy, cost effective way to minimize the risk of processing a fraudulent loan.

Tools from a third party vendor can help catch errors and/or identify intentionally fraudulent information. Lenders can utilize these reports to verify identity and other commonly misrepresented piece of information that lead to fraud. Lenders are able to compare loan application data to their origination, servicing, or other customer databases to identify issues such as multiple applications, occupancy concerns, or erroneous or fraudulent social security numbers. Data Facts offers “build your own” packages for customized reporting that flags suspicious reports and helps lenders stay in compliance.

Julie Wink sums it up: “Everyone in the mortgage industry must do their part to combat fraud. We are offering these products to assist our customers in reaching their goal of no fraudulent loans.

Click Here to download our eBook: Time is Money: Detect Lending Fraud Faster!

About Data Facts Inc

Since 1989, Data Facts has provided information you trust and rely on to make sound lending, hiring, and other business decisions. They have a reputation for providing premier lending solutions that include an Appraisal Platform, multiple Verifications Services, Flood Certifications, Fraud Solutions and Credit Reporting. These solutions ensure that lenders close more loans faster and easier than ever.

Data Facts has offices located throughout the United States and serves a wide variety of customers within the United States and Internationally. They are a 100% woman owned, diversified supplier and offer solutions that minimize risk and keep you in compliance.

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Look Before You Leap on the Social Media Bandwagon

Social-Media

As more and more people sign on to Facebook, Twitter, Pinterest, and the many other social media sites available, hiring professionals are becoming more tempted to take a peek at the information before hiring an applicant. Who can blame them? There is virtually a goldmine of potentially  valuable information to be gleaned from a person’s profile, blog, photograph, or collection of tweets.  Lending institutions could benefit greatly by knowing about a mortgage professional’s online presence up front.

However, this type of investigation is not without its risks.  There is a sea of controversy swirling around about utilizing social media to screen job candidates, and whether or not a company should do it.

According to a survey recently by Careerbuilder, 37% of companies use social media to screen their applicants, and 11% of companies plan to use it in the near future. Social media allows hiring managers to gain unprecedented access to information about the applicant.  They can discover negative aspects (vulgar language, bad grammar, illegal activities) and also positive information (charity work, good communication skills, awards received) with just a few clicks of a mouse.  Banks and mortgage companies in particular could benefit from this type of information. Someone who will not represent the lending institution in a professional manner online could be detrimental to the business’s reputation and public persona.  Just one faux pas by an employee can sometimes take a company years to recover!

However, there are drawbacks. A profile also may show information about a person’s race, age, religion, or disability; all of which are illegal to use in the hiring process. Once an employer sees this information, they cannot ‘unring the bell.’  Once you have it, there is no way to prove it had no bearing on the hiring process.   Employers that use social media sites to make employment-related decisions without taking the time to implement them into their current hiring policy processes could be violating employment and privacy laws.

While it’s not illegal to look at a candidate’s social media footprint, it’s advisable to consider several matters before you hop on the internet to check out a potential employee.

Here are 7 steps to follow if your company decides to utilize social media in its pre-employment screening process:

1. Develop a clear policy. When planning to utilize social media in your hiring process, one of the most important steps is to have a policy. Set in place the sites that will be screened, and the information you will be trying to find.  While positive and negative information may be uncovered about the candidate, the best practice is to look for relevant information related to their work. While you don’t really need to be privy to someone’s partying habits or the fact that they kissed a boy in the streets of New Orleans, you would need to know about unsavory behaviors like racial slurs, threats of violence, or misleading information about their work history or education background.

2. Get the applicant’s consent.  It’s considered best practice to follow the same notice and disclosure policies as you normally would with any pre-employment screen.  Advise the applicant that part of your company’s screening process entails checking their social media footprint, and gain their consent to do so.

3. Remember that consistency is the key.  One of an employer’s most important defenses in a lawsuit is consistency within company policies.  Social media screening policies should be written in black and white, and should specifically outline the sites screened and the information being sought. This policy needs to be applied to EVERY candidate.  You can get yourself into trouble by using a ‘go with your gut’ strategy and screening only those people you feel may be hiding something.  If the policy states you do not screen Twitter tweets because you feel they have no relevant information about job performance, don’t suddenly look at it if the candidate looks sneaky or has too many piercings.

4.  Use a third party to perform the search.  If the person conducting the hiring performs the social media search themselves, it is a given that they will eventually see information they should not use in the hiring process. Examples of this are a person’s age, race, religion, health condition, etc. Using a third party, independent researcher to perform the search will greatly reduce this risk.  The researcher (which can be someone from outside the hiring department but still within the company OR a third party background screening company) should work from a list the hiring manager has pre-defined that they want to discover about the candidate.  Upon completion, the researcher can return his findings, while omitting any information that is illegal to use in a hiring decision.  This practice will ensure that the person or people making the hiring decision do not have access to protected information.

5. Do not friend the applicant or ask them for their passwords! Both actions are big No No’s and can bring on all kinds of trouble.  When utilizing social media for screening purposes, view only public information. Do not ‘friend’ or ‘connect’ with the applicant so you can see additional, private information. And never ask the applicant for the passwords to their social media accounts. Most social media sites have privacy sections in their agreements for service that ban a user from sharing his login information. Additionally, several states have even gone so far as to already pass legislation banning companies from asking for individual’s passwords. This needs to be viewed as a big invasion of privacy and avoided at all costs.

6. Have a clear, understandable reason if you reject the applicant.  If a social media search returns information that causes you to reject an applicant, an employer needs to be able to point to legitimate hiring requirements as a reason to not hire a person (such as evidence the person has badmouthed their current employer, participated in illegal activities, used bad judgment, lied about their background, etc).

7. Give the applicant a chance to explain. If a piece of information is found on social media that would weigh against the applicant’s chances of being hired, do not write them off immediately. Showing the applicant what was found on social media, telling them why it’s a concern, and giving them a chance to explain is an important part of the screening policy. Perhaps the negative information was inaccurate or misleading. There is also a chance it was a different person of the same name. The applicant deserves the chance to refute the information.

It is highly recommended and advisable for any lending institution to implement these steps into their pre-employment screening policy BEFORE they begin utilizing social media to screen applicants.

And remember, while social media sites can offer up lots of valuable information on a potential job candidate and his fit within the company, this should not be the only background screening tool utilized in the hiring decision. In order to make a sound hiring decision, social media screening should be used thoughtfully in conjunctions with the traditional methods of screening.

Using social media sites to screen job candidates is not risk-free, especially since there has yet to be many clear laws or court cases defining this area. When implemented into an employer’s current policy and with guidelines intelligently drawn, social media screening can supply a better, all-round understanding of the job candidate.

Susan McCullah

Product Development Director

Data Facts, Inc. has been providing you the Information You Trust since 1989. Susan is the Product Development Director for Data Facts, a Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services. Susan can be contacted at info@datafacts.com or http://www.datafacts.com.

DATA FACTS, Inc. to Attend the MBA’s 100th Annual Convention and Expo

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Data Facts will be introducing a full suite of products that will help streamline the lending process and keep Lenders in compliance. In today’s financial climate, it is becoming more evident by utilizing bundled services from a single provider Lenders will be able to serve clients more effectively, profitably and will emerge as industry leaders.

Data Facts’ President & CEO, Daphne Large, serves as the 2013 NCRA President, and Julie Wink, Data Facts’ Executive Vice President, serves as the Co-Chair of the Education and Compliance Committee. Data Facts has worked closely with the NCRA for many years, and the NCRA is delighted to have both Large and Wink in such influential positions in 2013. This past June, both Daphne and Julie attended the NCRA Lobby Day in Washington DC. While there, they spoke to various government agencies and public officials, lobbying for better regulations that impact our industry.

The Mortgage Bankers Association (MBA) is the national association representing the entire real estate finance industry. The MBA is an influential voice for real estate finance, leading the charge to create a sustainable and vibrant future for all industry participants. The National Mortgage Banker’s Association provides mortgage companies and banks information that is both timely and critical. This year’s conference will celebrate the Association’s 100th year anniversary.

Daphne Large, Data Facts’ CEO, is proud to be a part of the conference. “We have always supported the local MBA’s and are thrilled to be exhibiting at the national level. We believe the MBA serves the industry well, and know we will have a positive experience both in exhibiting at the conference and attending the informative sessions that are planned. Our customers count on us to be well informed, and the conference will expand our knowledge of the hot topics in the industry.”

About Data Facts Inc

Since 1989, Data Facts has provided information you trust and rely on to make sound business decisions. Data Facts has offices across the United States and provides crucial information for a broad variety of business needs, such as background screening for employment, tenant screening for residential firms, and up-to-date financial background data for mortgage companies. Our top of the line technology delivers information quickly, accurately and securely. For more information about Data Facts visit  http://www.datafacts.com. Follow us on Twitter @DFlending or @DFscreening. ‘Like’ us on Facebook at “Data Facts Lending Solutions” and “Data Facts Background Screening.”

~~Stacie Shelton is a member of the Marketing Team at Data Facts, Inc. Since 1989, Data Facts has provided information you trust and rely on to make sound business decisions. Our CEO, Daphne Large is the 2013 NCRA President and our EVP, Julie Wink is the Co-Chair NCRA Education and Compliance Committee. We provide information for a broad variety of business needs, such as background screening for employment, tenant screening for residential firms, and up-to-date financial background data for mortgage companies. Our top of the line technology delivers information quickly, accurately and securely. For more information about Data Facts visit www.datafacts.com. Follow us on Twitter @dflending and Facebook at “Data Facts Lending Solutions.

Mortgage Triggering: Who is contacting my customer?

Mortgage TriggeringMortgage triggering is a frustrating, pull-your-hair out phenomenon that rears its ugly head frequently during a refinance boom. If you are a mortgage lender and haven’t experienced it yet, lucky you.

Mortgage triggering is the process that some lenders use to gain customers.

Basically, lenders purchase these ‘trigger leads’ from the bureaus or other companies. The leads are consumers who have recently had their credit pulled in order to qualify to buy a home. Once purchased, the lenders call these consumers, (who could be YOUR customers) and extend them a firm offer of credit. This process is covered by the FCRA as a legal practice. (FCRA, 15 U.S.C 1681). The wording of the language is: ‘to obtain a consumer’s private information an institution must have consent OR present a firm offer of credit in their solicitation’. So, when lenders buy these leads, they must call, email, or mail a firm offer of credit to the consumer. The argument for triggering is that is gives consumers a choice. Triggering offers consumers more than one option for a mortgage loan. The argument against triggering is that unscrupulous loan officers may make ‘too good to be true’ statements, or run a bait and switch scheme using the consumers’ information. Through the years, Data Facts has answered this question many times. Customers are confused and frustrated by the sometimes multiple phone calls they receive from competing lenders. They feel their private information has been sold. And it has.

How customers are triggered: lenders set up their criteria based on the credit score, LTV ratio of the loan, and even the geographic area of consumers they wish to target. Once set up, the consumers that fit these criteria are monitored by the triggering company. When a consumer that is on this list has their credit pulled for a mortgage loan, this triggers in the system. The lender then receives this information, and calls the consumer with an offer.

How to guard against it:

1: Educate your customers. Warn them that they may receive calls with competing offers, and they may be ‘too good to be true.’ Simply knowing to expect the calls from other lenders will decrease the frustration most consumers feel about this practice.

2. Tell your customer to opt out. If a consumer opts out of prescreened offers, this will stop the trigger leads. They can opt out at www.optoutprescreen.com. The catch; this process takes 5 days to take effect, so if their credit has already been pulled, this will not block the offers immediately. Your name may have already been sent out on a list that hasn’t mailed yet, so you may still receive items some time after you have opted out.

3. Advise your customer to get on the do not call list. All trigger leads are supposed to be scrubbed against the do not call list. Consumers can add their name to the list by calling 1-888-382-1222 from the phone they wish to register, or register their number at www.donotcall.gov. Again, this takes a few days to take effect.

There is no sure fire way to protect your customers from receiving these trigger calls. However, if you arm them with the pertinent information, you can minimize the possibility of losing a customer to your competitors.

~~Stacie Shelton is a member of the Marketing Team at Data Facts, Inc. Since 1989, Data Facts has provided information you trust and rely on to make sound business decisions. Our CEO, Daphne Large is the 2013 NCRA President and our EVP, Julie Wink is the Co-Chair NCRA Education and Compliance Committee. We provide information for a broad variety of business needs, such as background screening for employment, tenant screening for residential firms, and up-to-date financial background data for mortgage companies. Our top of the line technology delivers information quickly, accurately and securely. For more information about Data Facts visit www.datafacts.com. Follow us on Twitter @dflending and Facebook at “Data Facts Lending Solutions.

7 WAYS TO CLOSE LOANS FASTER AND STAY IN COMPLIANCE

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In today’s financial climate, it is becoming more evident by utilizing bundled services from a single provider Lenders will be able to serve clients more effectively, profitably and will emerge as industry leaders.

Why should you bundle services? First of all, one vendor equals fewer headaches. It standardizes operations and saves time. You don’t have to call, email and wait for responses from multiple vendors. Secondly, it builds a stronger relationship. This makes for a more positive overall experience. Lastly, it helps you to stay in compliance. Compliance is ALWAYS a top priority. Bundling services minimizes the risk of being out of compliance by having all your paperwork from ONE source. Your chosen vendor should be constantly providing compliance information for your records.

Credit

Buying a home can be one of the most stressful adventures a consumer can embark upon. From choosing the home, negotiating the price, obtaining a mortgage loan, to securing ownership, there are many pitfalls that can derail the plan.

Consumers often mistakenly believe that it is clean sailing after the mortgage loan process has been started. If the credit score it good, they are good to go, right. Wrong. Credit Education can help streamline the loan process. The more that the consumer knows on the front end, the easier the process will be.

When looking for a Credit Reporting Agency (CRA), there are a few things that you need to know. The Federal Fair Credit Reporting Act regulates the operation of consumer reporting agencies, and also affects you as a user of information. It regulates how a consumer’s information may be used, and restricts who has access to this sensitive information. In order to be in compliance, one needs to have a thorough understanding of the FCRA.

Know your state laws. Certain states have passed restrictions in addition to the FCRA. Make sure to be familiar with any additional laws in your state, and follow these rules carefully to maintain full FCRA compliance.

Debt Monitoring

There are negative actions that can be taken even after the mortgage loan has been applied for that can decrease or annihilate the chances of getting that loan closed. The Fannie Mae LQI initiative is meant to keep the amount of loan buy-back low by verifying the quality of a purchaser before it closes. Debt Monitoring allows loan officers to monitor their borrowers during the “Quiet” period between when the loan application is made and when it closes. The borrower is monitored on a daily basis and if there is a change in their credit history, the loan officer is notified within 24 hours.

Accessing the tradeline changes by pulling a soft pull credit report is another method of satisfying the Fannie Mae LQI initiative. Soft pulls – as they are known in the industry because they do not have an impact on a person’s credit score – instantly accesses any credit history changes between origination and closing.

Automated Appraisal Platforms

Don’t risk the stiff penalties that are being imposed for non-compliance. Automated appraisal ordering platforms are a great way to maintain compliance for UCDP and the Dodd-Frank Act. Look for a vendor that allows you to use your own appraisal vendors and allows you to maintain control of the process. The best product will be one that maintains appraiser rotation with total transparency, logs all communication between the lender and appraiser, and allows the appraisal to be uploaded straight to the UCDP. A certificate of compliance or some other form of written documentation should be provided with every appraisal that is generated through the system.

Look for an automated appraisal platform that lets you choose if you want to override service areas for all of the appraisers in your panel, or only certain appraisers. You have the option to have a “mixed” panel: a panel where you have specified service areas for certain appraisers, but kept the appraiser-entered service areas for others.

When you have controlled the service areas and qualifications of appraisers in your panel, the areas that you have entered will override the appraiser’s settings in the appraiser profile. This will give you more control over your order processes to make sure the appraiser with the right expertise gets the order.

Fraud Prevention

Regulators and secondary market investors are requiring originators to validate more of the borrower and property data using independent third-party sources to help combat this trend. With the changing regulations loan officers must be constantly aware of growing fraud trends.

Approximately 60% of mortgage fraud includes ID discrepancies. It is a good idea to implement an automated investigation of the borrower’s identity into your best practices. Utilize a system that instantly searches millions of databases and validates the person’s name is actually connected to the social security number, address, phone number, date of birth, etc. This will allow a lender to easily catch and circumvent high-risk identity mortgage fraud in close to 9 out of 10 instances.

Verification Services

Tax Return Verifications are a great way to combat income fraud. Look for an easy to order platform, from which you can order directly. Your vendor should review the documents before submitting to ensure that the IRS does not reject the order. The IRS will still charge you a processing fee, even if they reject the order.

Social Security verifications prove that the person across the desk from you really is who they say that they are.  Easy to read reports add that extra layer of protection to make sure that you have covered all your bases.

Mortgage Verifications will verify mortgage payments, payment history and the name of the creditor. Employment verification checks dates of employment, salary and the position held. Verification of deposit will verify funds in a checking or savings account and the current balance.

Flood Certifications

Over the last several years FEMA has made over 83,000 flood map panel changes affecting 92% of the US population. This means millions of properties may have a flood status change. According to the FDIC Annual report for 2011, 80% of the fines issued by the FDIC in 2011 were flood related. The Biggert-Waters Flood Insurance Reform and Modernization Act passed in June 29, 2012 included an increase for penalties against lenders from $350 to $2,000 for each flood violation and eliminated the annual cap on flood violation fines. Ease your compliance worries by signing up with a vendor that has the dedicated staff and funds.

Make sure that your vendor is partnered with a reputable flood certification vendor. Flood Certification has improved greatly with regards to technology. Vendors no longer are pulling actual maps to locate specific properties. Everything has been digitized, so information can be gained within seconds. 95% of flood certifications can come back within just a few seconds. Your flood certification portfolio should have the latest flood data throughout the entire life of the loan and will also make sure you receive any revised flood certifications within 60 days of the new maps becoming effective so you can take the appropriate next steps as quickly as possible.

With new regulations being implemented daily, there are more requirements than ever to get a loan approved. Bundled services are the way of the future. They reduce turnaround time, improve productivity, improve the bottom line and keep you in compliance. By utilizing bundled services from a single provider, Lenders can set themselves apart in a highly competitive market.

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Johnna Leeds

Vice President of Compliance

Data Facts, Inc. has been providing you the Information You Trust since 1989. Johnna Leeds is the Vice President of Compliance. She has been with Data Facts since 1996. She is a member of NAPBS, and currently serves on the NAPBS Best Practices Group, Litigation Avoidance, Criminal Records Reporting Practices and Breach Prevention committees. Johnna can be contacted at http://www.datafacts.com.

From Data Facts: A Quick Check of Your Compliance Standards

Red tape, bureaucracy, paperwork!  Whatever you want to call them, compliance rules and regulations can be time consuming and confusing.

However, complying is very important, and should be a top priority. The penalties for non-compliance are just too stiff to ignore.  Here are a few tips to help make sure you (as a mortgage lender) are in compliance with federal and state regulations. *

Befriend the FCRA:

The Federal Fair Credit Reporting Act regulates the operation of consumer reporting agencies, and also affects you as a user of information. It regulates how a consumer’s information may be used, and restricts who has access to this sensitive information.   In order to be in compliance, one needs to have a thorough understanding of the FCRA.

Store your paperwork:

The Federal Equal Opportunities Act states that a creditor must preserve all written or recorded information connected with an application for 60 months. In keeping with the ECOA, Data Facts, Inc. requires that you retain the credit application and, if applicable, a purchase agreement for a period of not less than 60 months.

 Properly dispose of sensitive information:

As part of the Fair Credit Transaction Act of 2003, if a consumer report is being used for a business purpose, it is subject to the Disposal Rule.   This rule calls for the proper disposal of information in consumer reports and records to protect against “unauthorized access to or use of the information.”

Guard your emails:

Email hacking is becoming more and more prevalent. Periodically review how your organization is using email to exchange information. Make sure sensitive information that is being sent via email is protected by using Winzip password protection, and by never sending social security numbers in the body of the email.

Have a plan for a breach: 

If you have not already done so, establish processes and procedures (in a written plan) for responding to and containing security violations, unusual or suspicious events and similar incidents. The goal should be to limit damage or unauthorized access to information assets and to permit identification and prosecution of violators.

 Know your state laws.

Certain states have passed restrictions in addition to the FCRA. Make sure to be familiar with any additional laws in your state, and follow these rules carefully to maintain full FCRA compliance.

 Maintaining compliant procedures and processes is an integral part of doing business in the mortgage industry.  By taking the time to become comfortable with the laws and regulations, you will be better able to protect yourself and your business from lawsuits, fines, and penalties.

*(This is not intended to provide legal advice. You should consult your own company’s Human Resource and Legal departments and/or obtain legal advice).

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.

April is Financial Literacy Month: Numbers and Websites You Should Know

In the spirit of Financial Literacy Month, Data Facts has compiled a list of very important numbers and websites for consumers.

Ta-Da!

To obtain a credit report:

www.annualcreditreport.com This site allows you to request a free credit report from all 3 bureaus once every 12 months. Call 1-877-322-8228 to order the report by phone.

To get on the Do Not Call List:

 Call 888-382-1222 from the phone you wish to register, or go to www.donotcall.gov . Due to the Do Not Call Improvement Act of 2007, phones that are registered will remain on the list permanently (previously it expired after 5 years).

To opt out of mail solicitation and pre-screened offers:

 Call 1–888–567–8688  or visit  www.optoutprescreen.com . You are able to opt out electronically for 5 years. To opt out permanently, you will need to print out the form and mail it in.

To contact the Credit Bureaus:

Equifax: Call 800-685-1111 or visit them online at www.equifax.com
Experian: Call 888-397-3742 or www.experian.com 
Transunion: You can reach them at 800-888-4213 or www.transunion.com  

To create a letter disputing errors on your credit report:

Under the FCRA, both the credit reporting company and the information provider  are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the credit reporting company and the information provider. Visit http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.shtm for a sample dispute letter.

Other important numbers to have on hand:

  • Your insurance agent
  • Your health insurer
  • Your bank’s main AND local branch
  • Your brokerage house
  • All of your credit card issuers

Utilize these websites and numbers to make sure you welcome the month of May prepared and in top financial condition!

~~Susan McCullah is the Product Development Director for Data Facts, a 23 year old Memphis-based company.  Data Facts provides mortgage product and banking solutions to lenders nationwide. Check our our website for a complete explanation of our services.