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The Three Percent Solution

TheMReport — News and strategies for the evolving mortgage marketplace.

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Th e M Rep o RT | 35 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t ORIGINATION the latest UWm launches conventional Financing for 97% ltv With Fannie Mae and Freddie Mac introducing new low down payment loan options, United Wholesale Mortgage is the country's first lender to make such loans available. i n response to plans by Fannie Mae and Freddie Mac to introduce loan options for down pay- ments as low as 3 percent, United Wholesale Mortgage (UWM) announced the launch of a new product of- fering conventional financing for up to 97 percent loan-to- value (LTV). The release follows the latest update to Fannie Mae's Desktop Underwriter (DU). "Immediately after Fannie Mae released version 9.2 of DU, we had the opportunity to reintroduce this program given Fannie's changes, and we're the first wholesale lender in the country to make it available," said Mat Ishbia, president and CEO at UWM. "We always strive to give our partners a competi- tive advantage. Being first to market allows UWM's part- ners to get many consumers into loans that are more affordable." UWM partners already have access to the program and can find it through the company's loan portal, EASE. It can also be ac- cessed through UWM's UMobile application for smartphones. Details and other pro- gram highlights can be found on UWM's website. mortgage application Fraud continues to climb Researchers blame tightened standards for the uptick in misrepresentation for the third straight year. d espite improving economic conditions, occurrences of mortgage application fraud grew in 2013 for the third time in as many years, according to research conducted by LexisNexis. In its annual analysis of mort- gage fraud across the country, LexisNexis Risk Solutions found 74 percent of mortgages submit- ted to its Mortgage Industry Data Exchange in 2013 involved some sort of fraud or misrepresentation on the application. That figure compares to 69 percent in 2012 and 61 percent in 2011. Tim Coyle, senior director of financial services for LexisNexis Risk Solutions, said restrictive credit conditions are partly to blame as originators struggle to boost profits. (The research deals only with confirmed fraud reports involving industry insiders.) "The credit market is a lot tighter than it used to be, making it a lot more difficult," Coyle said. "As it becomes tighter, you're go- ing to see more and more fraud like this, that is on the front end of (the mortgage process)." Among other mortgage fraud types, "fraud and misrepresenta- tion on the credit report" saw the most significant increase, rising to 17 percent from 5 percent in 2012. On the other hand, "appraisal and valuation fraud" experienced the biggest drop over the year, with only 15 percent of loans reported showing those problems compared with 26 percent in 2012. Just as more stringent regula- tions pushed up application fraud incidence, Coyle said increased scrutiny—in the form of the Home Valuation Code of Conduct—helped drive down appraisal fraud. "This landmark regulation, which disrupted the historical appraisal process, has everything to do with the drop in this year's appraisal fraud," he said. "Although no longer in force, HVCC influenced the Appraiser Independence Requirements now found in the Dodd-Frank Wall Street Reform and Consumer Protection Act." Florida held on to its rank as the most fraud-ridden state in the country in 2013, posting a Mortgage Fraud Index score of 529—more than double the index score for Nevada, which came in second at 221. An index level of 100 represents the anticipated amount of fraud based on a state's number of loan originations. Despite having the highest index by far, the Sunshine State actually saw a major improve- ment from 2012, when it recorded a fraud index of 698. "I was surprised to see Florida drop as much as it did. One hundred seventy points is a big drop in a year," Coyle said. Also surprising was the ap- pearance of Utah, which jumped to seventh place on the list with an index of 149—up more than 100 points from 2012. The LexisNexis team attributed the increase to the state's proximity to fraud hotspots like California, Arizona, and Nevada, indicating a potential movement in fraudu- lent activity. "In the U.S., fraud across all industries is close to a trillion- dollar problem," Coyle said. "The results of this study clearly demonstrate that the mortgage industry, like other industries, is making progress in combating fraud in some areas, such as ap- praisal fraud, but still has a lot of work to do in other areas."

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