Multi-Closing Alert Program

What Is Multi-Closing Fraud?

Multi-lien or shotgunning fraud is an extremely profitable scam that takes advantage of the lag between closing and recording to solicit multiple loans on a single property. Difficult to detect through traditional methods and extremely profitable for perpetrators, multi-lien cases identified currently average about $320,000 each and can affect several lenders.

Closing the Gap

The Multi-Closing Alert Program (MCAP) curbs shotgunning fraud by notifying members when the system detects two or more loans closing on the same property address. You and other lenders---including the top five US mortgage originators---contribute daily batch files of closing activity that we compare against the MCAP contributed database containing more than 85 percent of all equity loans and 60 percent of the nation’s first-lien mortgages. When the system finds an address match, we issue a same-day alert to affected lenders, notifying each of the property address and transaction participants’ contact information (without SSN information).

Proof Positive

Since its inception, MCAP has detected more than 1,200 cases confirmed by lenders as shotgunning fraud attempts. Those 1,200 cases represent thousands of MCAP participant loans totaling more than $365 million. That success has not deterred fraud perpetrators from devising increasingly elaborate schemes and going after the greater gains available through first-lien mortgages.  As a result, the percentage of detections has remained consistent with loan volumes and average loan value per case has grown from $296,000 per case in 2007 to $320,000 in 2010. Though shotgunning attempts continue evolving, perpetrators cannot alter the property address, making even the most complex schemes vulnerable to detection through MCAP.

Deterrence Factor

In addition to averting attempted fraud, MCAP has proven to be an effective deterrent. Just as an alarm company sign scares away burglars, once perpetrators discover a lender has joined MCAP, they move onto easier targets. In fact, the deterrence factor has proven to be so strong that we now know to expect a sharp drop in attempts after a lender’s first 30 days in the program.

Fraud-Fighting Consortium

By changing tactics, moving to new geographies and avoiding MCAP participant lenders, criminals continue to turn large profits on successful shotgunning schemes. Yet, the effectiveness MCAP offers proves that lenders can stop multi-lien fraud with a simple, coordinated effort. The more lenders who participate in MCAP, the greater the industry’s ability to put an end to multi-lien fraud.

Join the Fight

MCAP is open to lenders of all sizes through subscription packages based on loan volume. In addition to our notification services, we facilitate monthly calls to discuss program details and fraud prevention best practices. To learn more about becoming an MCAP participant, contact us today.

Benefits

  • Avert losses by identifying multi-lien fraud attempts before funding loans
  • Earn significant ROI by avoiding only a few fraudulent loans
  • Check loans against lender contributed databases that currently contain about 85 percent of all equity loans and about 60 percent of first-lien mortgages.
  • Deter fraud by promoting your participation
  • Learn fraud prevention best practices from monthly participant calls

Results

  • Since its inception, MCAP has detected more than 1,200 cases confirmed by lenders as shotgunning fraud attempts.
  • Those 1,200 cases represent thousands of MCAP participant loans totaling more than $365 million.

Myth: The problem of multi-lien fraud has gone away.

Fact: Decreased lending volumes have lowered the number of alerts, but fraud perpetrators have expanded their repertoire to include more profitable first-lien loans and highly sophisticated schemes.

Fact: MCAP saved its lenders more than $11 million in the first six months of 2010, compared to $15 million in the first six months of 2007, making multi-lien fraud rates about equal on origination volume. 

Fact: Average amount per case (all attempted loans):

  • January thru June 2007: $296,000
  • January thru June 2010: $320,000

Fact: Average loan amount per case:

  • January thru June 2007: $143,000
  • January thru June 2010: $160,000

Fact: Multi-lien fraud is still with us—concurrent closings as a percent of all closings rose 8 percent between Q3 2008 and Q4 2009.

Fact: Despite increasingly complex schemes, multi-lien fraud remains easy to detect with MCAP.

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