Check these Excerpts from Banknet360 Blog - Is Fraud Stoppable? (Registration Required)

National mortgage lenders, including Countrywide Financial Corp. and Argent Mortgage Co., are facing losses of at least $40 million, after the largest mortgage fraud scheme in the country was uncovered recently.

Here are some of the strategies that mortgages are adopting to fight this. Here is another excerpt from the same blog.

Mortgage lenders tout employee education and training as keys to combat fraud. They advocate teaching employees who review loans in the pre-funding process ways to spot potential fraudulent loans and endorse running loan information through robust databases that can spot inaccuracies across multiple documents.

But would those tools have been enough to stop such a massive fraud ring? What kinds of measures should lenders have in place to stop fraud before it happens — and protect themselves from millions of dollars in losses each year?

Employee education & training is certainly an option, lets see what this might mean?

1. Many mortgages are automating their pre-qual, pricing, underwriting & approval processes.Now, how would this “training” fit into this scenario?
2. The customers would be interacting with software systems, and you would expect the software systems to provide the kind of service that a human can provide.So, how will all these lessons learnt get into your software systems?
3. And again, new kinds of checks will be discovered everyday, so how will your system adapt in a continuous fashion?

Tackling frauds - The BRMS Way ..

A BRMS offers the ideal solution for attacking this issue.

Now lets define an alert. An alert is a business rule which if violated indicates a possible fraud application

This is what you could do

1. Capture the alerts as business rules using a BRMS
2. Validate every mortgage application against the known alerts as on that day.
3. Form a surveillance group that will research recent frauds and will continuously update the alerts database, probably on a daily basis
4. This will minimize training costs, and additionally ensure that the organization is keeping up and even do one up on the potential fraudsters
5. Additionally, all the alerts enforced by the system are immediately visible to the surveillance departments, in a form that they understand and digest

Moral of the story..

There are always going to be these smart ass fraudsters who will be coming up with one innovative scheme or the other.
Mortgage firms will have to be very agile and responsive to be able to combat these frauds. Business Rule Management Systems offer the ideal mix of agility and business user friendliness that are required to implement the next generation of fraud managemnt systems in Mortgages