Mortgage Loans - New Tool Avoids Potential Short Sale And Property Flipping Losses

Due to the current housing market crisis, the practice of short selling, which involves the homeowner selling their property for a lower amount than the outstanding balance on the mortgage, in order to avoid foreclosure and as a means of ensuring that the lender receives some return on investment, has become quite common.

The number of property flipping cases, which involves the purchase of a property by an owner, who subsequently resells the property for a significantly higher amount within a short space of time, has also become increasingly common.

DataVerify, a provider of fraud prevention and decision management solutions to the mortgage industry, recently announced that it had improved and enhanced its enterprise-wide fraud management platform, which is known as the Data Risk Intelligent Verification Engine (DRIVE), in order to assist lenders to identify and avoid potential short sale and property flipping losses.

Steve Halper, the President of DataVerify commented on the situation: “Our customers tell us these new tools are working and the reason why they work is because we apply what we learn from our customers’ own experiences. In reviewing customer transactions, we discovered that:

1. 7% of the properties are valued under current market value for other similar comparable properties.
2. 3% involve transactions in which the borrower is in the real estate or mortgage industry and did not disclose that fact.
3. 4% involve transactions in which the borrower has undisclosed self-employment.
4. 4% involve transactions in areas with very high rates of property flipping activity.
5. 4% contain IRS-validated tax transcript income variances of greater than 20%.

We used this type of information to create additional tools customer can use to predict these unique risks associated with short sales. The new short sale and property flipping fraud detection capabilities from DataVerify meet and exceed all stated industry needs today.”