Fundingshield’s ongoing dialogue with financial crimes advisors, cyber security experts and recent law enforcement data indicate an increase in real estate settlement related fraud in the fourth quarter of 2017.  This forecast is based on our analytics, trends over the past 10 years of data and the current rise in cyber related system breaches.  Fundingshield continues its surveillance of fraud tactics and noticed a seasonal trend of lenders potential settlement and wire fraud related cases. The Equifax breach furthers the impact of fraud beyond consumer level and we anticipate it will add to compromised information and personas within the mortgage industry.

The Federal Bureau of Investigators (FBI) recently indicated that well in excess of  $8 billion in reported real estate settlement fraud has been accounted for thus far.  The bureau is only able to observe the reported activity which does not take into account the fact that a majority of losses are not reported by the impacted parties who seek to be compensated through the insurance claims process or must assume the loss. This often leads to additional expenses being borne by the impacted parties as the lack of timely, accurate reporting and immediate engagement of law enforcement significantly increases the likelihood of non-recovery.

“With the increased ability to create believable personas and mimic processes used by financial institutions to validate identities and authenticate transactions, it is important for lenders and title insurance underwriters to have a backstop that confirm funds are being delivered to authorized parties in verified bank accounts that line up against closing documents,” mentioned William Klumper Fundingshield board advisor and Vice-chairman of MISMO (MISMO is a mortgage industry member based organization that creates standards that support solutions to the mortgage industry’s toughest business issues, reduce costs, and improve transparency and communications in housing finance).

“The holiday season brings increased amounts of consumer purchases and vacation time triggering coverage by back up or standby employees at lenders within key operations.  In looking back at the clients we have on-boarded and inquiries received during the slower production holiday seasons we actually see an increase in percentage of reported irregularities.  The data, across all client types, clearly pointed to the fact that the holiday season adds to the opportunity for criminals to manipulate the operations within wiring, funding and closing of mortgage loans,” stated Ike Suri Chairman and CEO of Fundingshield.

Fundingshield offers several products that act as a backstop control to lender driven closing and funding processes and third-party verification of closing documents including wire information at the loan level.  The firm has systems that inspect closing documents and wire instructions to confirm funds are delivered to the intended recipient and to protect the Lender’s interest and reduce unnecessary claims with title insurance underwriters.

Given this expected increase in fraudulent activity within the industry during the upcoming holiday season, Fundingshield reminds lenders and insurers to be pro-active and take pre-emptive steps to safeguard against these operational risks.  Further we recommend a review of the closing processes and procedures and exploring how a partnership with Fundingshield can enhance your overall controls and protect your funds. Please contact info@fundingshield.com for the information or call 800 295 0135 x2.