Risky Business

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feature ANALYTICS Or ig i nat ion s e r v ic i ng The Accurate Approach to Loan-Level Reporting With loan-level data now squarely in regulators' radars, accurate and timely reporting is more imperative than ever. By Phil Britt O ver the past several years, the demands on loan-level reporting for repurchases have grown tremendously, says Jackie Doty, VP of collateral strategies for CoreLogic, based in Irvine, California. Before 2011, the GSEs had not gone through a loanlevel review until a loan entered default. Now they are requiring standardized data as soon as they receive a loan. "The GSEs made it clear to us that their goal was to improve the process," Doty said. "They wanted fewer repurchases, so they wanted better quality control. This way they know much earlier in the process if there is a problem. The GSEs are deploying different types of technologies to look for material deficiencies in loans at the loanlevel and at the lender level." For example, Freddie Mac has increased its computing power by 56 percent and its storage capacity by 50 percent in the last two years, Robert Lux, SVP and chief information officer, wrote in a March blog post on the GSE's website. In September 2012, the GSEs unveiled a new process for pushing the review process to the front end of the loan approval cycle with the intent of reducing any data discrepancies and to reduce repurchases, meaning more stringent loan reporting requirements. To meet these needs, CoreLogic is providing a variety of technologies that help provide better insight for loan-level reporting. CoreScore Alternative Credit Analysis grants deeper insight goal with better reporting is to reduce fraud losses," she said. The GSEs are looking more closely at appraisal reports as well because inflated appraisals were among the issues that came to light during the industry downturn. CoreLogic's Loan Safe Appraisal Manager reports on any apparent discrepancies in the data (e.g., the appraisal on a home listing a bathroom not included in Multiple Service Listing data) as well as for multiple properties owned by the same person, which can affect the underwriting guidelines. Doty expects the trend for increased emphasis on loan-level reporting and data integrity to continue, with loan-level reporting technologies continuing to evolve to be able to uncover patterns and trends of potential problem loans. Better Flexibility, Timeliness in Demand L enders are looking for data reporting that is more agile, flexible, and more able to keep up with the accelerating pace of The M Report | 63 se c on da r y m a r k e t Better Data Control into a borrower's credit history, pulling together property, landlord/tenant, alternative credit, and public record data to provide a more exhaustive look into a consumer's finances, uncovering some debts that may go undisclosed with some other reporting methods. The solution also provides new mortgage leads up to two months faster than traditional credit reports. Doty says the application enabled one top 15 lender to uncover $68 million in undisclosed debt over a period of just three months. CoreScore also found that 30 percent of all funded loans had previously undisclosed credit. While fraud has always been a concern, the extent of the problems came more into focus when the market started its tumble. It remains a problem the industry is still trying to reign in today— in part, through better loan-level reporting. CoreLogic's Loan Safe Manager, one of several fraud detection tools that the company provides, helps lenders spot potential fraud in the loan file by using pattern recognition analytics to uncover undisclosed debt and other fraud issues, according to Doty. "The a na ly t ic s L oan level reporting, like other portions of the mortgage industry, is coming under tighter scrutiny from all stakeholders—servicers, investors, and regulators. To ensure they abide by today's many mandates, lenders are relying on some state-of-the art technologies to provide the information stakeholders demand.

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