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Finding good partners
Third-party vendors, such as tech-savvy service companies, can help refine processing in automated underwriting that helps lenders uncover potential fraud sooner rather than later.
For example, by changing the warnings in reporting inconsistencies, processors can be told specifically what to do with each type of warning. Some actions and responses are made sooner in the loan process, even before going to underwriting.
This can go a step further with more-dynamic loan decisioning that can interface with the vendor's system. This removes human error by eliminating steps such as logging into the service company's system and retyping an applicant's information. When a lender synchronizes its technology, it often takes only a few minutes to receive an electronic response.
Ultimately, it is the technology that allows lenders to meet or exceed industry standards for fraud methodologies. Brokers who use those lenders benefit from that tech muscle, as well. Robust decisioning engines can calculate thousands of loan parameters nearly instantaneously.
The technology will, especially when well-synched with any outside vendors, bring up red flags almost within the instant a loan comes through the system. In other words, technology not only eliminates the human impulse for a quick buck, but it also eliminates human error.
Brokers can do more than simply look for robust automated-underwriting and decisioning engines in their lenders. There are technological advancements that are also powerful weapons on the broker end. For example, today's online loan-management systems -- some available at no cost -- allow a brokerage to administer all loans in its pipeline to detect suspicious activity immediately. By instituting an administrator protocol for loan-pipeline access on the broker end, it is virtually impossible for the few bad apples out there to find a work-around.
After all, while most brokers are professional and recognize the importance of adhering to rules and regulations, there are some who are more short-sighted. If one broker or loan officer in a brokerage shop gets caught committing fraud, it reflects negatively on the entire organization. Some brokers in that organization might find it difficult to find work. It's unfair, but guilt by association is a fact of life.
This is why it is imperative to use any tools available, such as administrator-driven loan-pipeline management or automated decisioning at the lender level, to protect brokers from the shadow of these bad apples.
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In the end, all pieces of the machine must work harmoniously to combat fraud. And a lender that can accomplish that once is likely to accomplish it nearly every time.
John Samuelson has been with MILA Inc.
for three years, after spending six years as a regulator with the state of Washington. As manager of fraud and loss prevention for MILA, he is responsible for staying in front of technologies pertinent to fraud detection, assisting when necessary any criminal investigations and acting as the lender's point person for inquiries involving any type of fraud. To reach Samuelson with questions, please contact him at firstname.lastname@example.org.
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