The Psychology Behind the Recovery

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14 | Th e M Rep o RT Advertisement Income Misrepresentation: A Rising Source of Mortgage Fraud F raud findings statistics from Fannie Mae show that income misrepresentation is a rising percentage of all fraud. For loans delivered to Fannie Mae in 2011, 20 percent of all "significant misrepresentations," were related to income. In 2012, income misrepresentation was up to 23 percent. Falsification of Social Security numbers is up, too—from 5 percent of misrepresentations to 7 percent. Falsification of income and employment status is com- mon partly because there are so many ways to fake the documentation. Anyone with access to PowerPoint and a color printer can create a convincing paystub, and there are unscru- pulous companies that provide fake "employment verifications"— sometimes including having someone answer the phone with a convenient falsehood. In fact, a quick look at Fannie Mae's list of common red flags reveals "Employment and Income Documentation" as one of the most problematic sections, though the credit report list is not far behind. Using Fannie Mae's red flags as a checklist could save companies from potential buybacks. In fact, even if you weren't planning on selling the loan to a GSE, use of Fannie Mae's checklist would improve loan quality. The right kind of automation goes a long way toward cover- ing that checklist. For example, the Fannie Mae red flags include "Withholding totals do not foot from pay advice to pay advice." But if you're getting an automated verification, the data is straight from the employer, and you won't need to go through a series of pay advices, manually checking the numbers. An applicant's ability to afford can be confirmed quickly and easily with Equifax Verification Services. Qualified users with the required permissions can get a verification of income— information that comes straight from the employer. Income verifications contain both basic employment information and detailed compensation data— wages, bonuses, commissions, and overtime. If provided by the employer, the verification will also include historical payment data, and dates and amounts of the applicant's most recent and projected pay increases. For more information, visit Repurchases are costly. WHAT'S YOUR DEFENSE? Turn to the experts—Equifax—to verify borrower employment status and payroll income at the time the loan closed, to ensure the loan file matches the borrower's employer information. WWW.THEWORKNUMBER.COM/RISK The Work Number ® Instant access 230 million employment records 3,000 contributing employers Equifax and EFX are registered trademarks of Equifax Inc. Inform > Enrich > Empower is a trademark of Equifax Inc. Copyright © 2014, Equifax Inc., Atlanta, Georgia. All rights reserved. All other registered marks, service marks and trademarks listed are the property of their respective owners.

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