Mortgage fraud of course will exist so long as mortgage loans are being issued. It’s just part of the business. Ever since the residential real estate market began nose-diving seven eight years ago specifically the property valuation fraud has steadily increased. The reason is rather clear; housing prices went chaotically over the edge, and still keep sinking in many areas. To get home loan applications approved by underwriters in a depressed market like today’s over-valuing property on appraisals or BPOs - broker price opinion – has become an issue for mortgage lenders. Usually when there is serious trouble with a file a buyback request will soon arrive in the mail and that can really hurt.
Interthinx, a mortgage risk management shop out of California, discovered that valuation fraud had doubled since 2006 and went to work for a suitable solution. It came up with the idea of using satellite images via Google Maps, adding them to its existing FraudGUARD program. Through Google’s image database a 360-degree street view of the property in real time is available for verification against submitted appraisals and BPOs. That’s surprisingly simple but also clever.
With this tool a mortgage lender risk analyst can let his fingers dance across the keyboard to pull up in seconds the incoming satellite data, easily decipher what he sees and then promptly act on it. On the other hand, manual verification of valuation numbers is time-consuming and costly and often simply impossible to do due to physical distances.
Despite Interthinx’ upgrade to its service the inside of the property still remains a mystery, yet the main characteristics on the outside, including the street address, will reveal plenty as to the BPO’s accuracy. It certainly adds a useful tool to the mortgage risk review process. A day will come when full appraisals are done using an advanced satellite hanging in space peering down counting rooms, tallying up their dimensions and whether there is a fireplace. Predictably, it still won’t completely make mortgage fraud go away, but will lessen its impact.