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This “legitimate” SSN then can be used to open credit cards with a fake date of birth for the fake person. This would not set off any fraud triggers with the credit card companies or credit agencies because neither validates date of birth. Within six months, a reasonable credit score can be obtained, and the table is set for virtually untraceable mortgage fraud. Because the date of birth must be “reasonable” to establish credit (i.e., older than 18), when the fraudster applied for a mortgage, the CBSV would have caught even this sophisticated scam because the different dates of birth would have resulted in a non-match.
Although use of the CBSV is not a mortgage fraud catch-all, it severely curtails one of identity thieves’ favorite tools. Estimates of fraud reduction generally range from 70 percent to 80 percent. In addition to the worthy goal of reducing fraud, CBSVs are essential for originators to be compliant with the Red Flag Rule, which requires many financial institutions to implement an identity-theft prevention program. In addition, Fannie Mae introduced a requirement to verify borrowers’ SSNs as part of its Loan Quality Initiative.
Selecting a vendor
Using the CBSV is a critical component of the loan process, and mortgage originators thinking about adding this tool to their anti-fraud arsenal should carefully consider the vendors with whom they partner. There are five primary considerations when selecting a CBSV vendor:
Direct relationship with the SSA
Ease of use
There are some services not associated with the SSA that claim to validate SSNs, but without directly linking to the SSA master file and death index, these services provide an unreliable approximation of nonessential data points, like date of issuance. To prevent fraudulent loans and synthetic identity theft, it is necessary to validate the five key data points included in the CBSV.
A CBSV vendor should have an easily understood online process that produces instantaneous results, because the loan process does not allow for extended turnarounds. Additionally, it must be cost effective, meaning no set-up fees and a reasonable charge per verification. It also is important to partner with an organization that does not have a contract, a minimum monthly search requirement or a monthly service fee.
The resource requirement — time and capital — to prevent fraudulent loans is high. Criminals are changing tactics and refining their trade constantly. Loan originators are the front line of defense against fraud, and because of the CBSV, they at last may have a cost-effective, non-time-consuming weapon that neutralizes many mortgage-fraud criminals before they are able to commit their crime.
Denis G. Kelly, certified identity expert, is the nation’s leading identity-theft and fraud-prevention expert.
He is the author of the best-selling book The Official Identity Theft Prevention Handbook, a consultant to Congress on identity-theft and data-breach legislation and a special adviser to IDValidation.net, a consent-based Social Security verification company. Reach him at DKelly@IDValidation.net or (888) 943-2833.
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