Chat
Chat with Sales Hours: Monday-Friday 8:30 a.m. - 4:30 p.m. (CST)
Contact Sales
Call Sales Toll-Free 1-(866) 774-3282 Hours: Monday-Friday 7 a.m. - 5 p.m. (CST)
Product Login
Product Log-in
Product Support
Product Support
Email Sales
Contact Sales
After Hours
  • Support
  • Sign In Sign In
  • AUS NZ UK
CoreLogic - Home
  • Solutions
    view solutions by:

    Data Solutions

    • Lead Generation
    • Property Data
    • Location Intelligence

    Real Estate

    • Multiple Listing Enterprise
    • Agent & Broker

    Mortgage

    • Origination
    • Servicing
    • Appraisal
    • Commercial Property Tax

    Insurance

    • Hazard Risk
    • Catastrophe Risk Management
    • Risk Evaluation
    • Underwriting Automation
    • Weather Verification
    • Claims Automation
    • Restoration
    • INTRCONNECT

    Mortgage Lenders

    • Origination

    Mortgage Servicers

    • Residential Property Tax
    • Default & Loss Mitigation
    • Portfolio Insight & Monitoring

    Mortgage Appraisers

    • Appraisal

    Real Estate Agents & Brokers

    • Agents & Brokers

    Real Estate MLS

    • Multiple Listing Enterprises

    Commercial Real Estate Owners

    • Commercial Property Tax

    Marketing Departments

    • Property Data

    Insurance Underwriters

    • Risk Evaluation
    • Underwriting Automation
    • Hazard Risk
    • Catastrophe Risk Management

    Insurance Risk Managers

    • Risk Evaluation
    • Hazard Risk
    • Catastrophe Risk Management

    Insurance Claims

    • Claims Automation
    • Restoration Contractors
    • Weather Verification

    Construction Contractors

    • Restoration Contractors

    General

    • Location Intelligence
    • Lead Generation
    • Data Solutions
  • Resources

    Reports

    • Climate Change
    • Construction Insights
    • Home Price Insights
    • Homeowner Equity Insights
    • Loan Performance Insight
    • Mortgage Fraud
    • Property Tax Deliquency
    • Single Family Rent Index

    Insight Blogs

    • Hazard HQ
    • Office of Chief Economist
    • Affordable Housing
    • Homebuying
    • Insurance
    • Other Articles

    More Resources

    • Case Studies
    • White Papers
    • Podcasts
    • Quick Takes
  • Company
    • About
    • Leadership
    • Newsroom
    • Contact
    • Careers
  • Search
CoreLogic - Home
  • Solutions
  • Resources
  • Company

    • About
    • Leadership
    • Newsroom
    • Contact
    • Careers
  • Accounts

    • Products Sign-in
  • Contact

    • Sales Contact
    • Product Support
  • Regions

    • Australia
    • New Zealand
    • United Kingdom
  • Social

    • Facebook
    • Instagram
    • Linkedin
    • Twitter
    • Youtube
Solutions
VIEW BY:
  • Data Solutions

    • Lead Generation
    • Property Data
    • Location Intelligence
  • Real Estate

    • Multiple Listing Enterprise
    • Agent & Broker
  • Mortgage

    • Origination
    • Servicing
    • Appraisal
    • Commercial Property Tax
  • Insurance

    • Hazard Risk
    • Catastrophe Risk Management
    • Risk Evaluation
    • Underwriting Automation
    • Weather Verification
    • Claims Automation
    • Restoration
    • INTRCONNECT
  • Mortgage Lenders

    • Origination
  • Mortgage Servicers

    • Residential Property Tax
    • Default & Loss Mitigation
    • Portfolio Insight & Monitoring
  • Mortgage Appraisers

    • Appraisal
  • Real Estate Agents & Brokers

    • Agents & Brokers
  • Real Estate MLS

    • Multiple Listing Enterprises
  • Commercial Real Estate Owners

    • Commercial Property Tax
  • Marketing Departments

    • Property Data
  • Insurance Underwriters

    • Risk Evaluation
    • Underwriting Automation
    • Hazard Risk
    • Catastrophe Risk Management
  • Insurance Risk Managers

    • Risk Evaluation
    • Hazard Risk
    • Catastrophe Risk Management
  • Insurance Claims

    • Claims Automation
    • Restoration Contractors
    • Weather Verification
  • Construction Contractors

    • Restoration Contractors
  • General

    • Location Intelligence
    • Lead Generation
    • Data Solutions
Resources
  • Reports

    • Climate Change
    • Construction Insights
    • Home Price Insights
    • Homeowner Equity Insights
    • Loan Performance Insight
    • Mortgage Fraud
    • Property Tax Deliquency
    • Single Family Rent Index
  • Insight Blogs

    • Hazard HQ
    • Office of Chief Economist
    • Affordable Housing
    • Homebuying
    • Insurance
    • Other Articles
  • More Resources

    • Case Studies
    • White Papers
    • Podcasts
    • Quick Takes

Home / Intelligence / A Good Offense Is the Best Defense to Prevent Undisclosed Debt

ABOUT THE AUTHOR
Mortgage Team
Mortgage Team
View Profile
  • January 12, 2023

A Good Offense Is the Best Defense to Prevent Undisclosed Debt

Ensuring quality loans requires trusted borrower verification and real-time application monitoring

In the property industry, transactions happen quickly. While fast and efficient property transfers can be ideal, it is precisely the speed at which transactions occur that makes it critical for lenders to exercise vigilance through application monitoring to avoid the financial consequences of processing and underwriting a loan that never closes.

Ensuring that a loan application is approved and closed is a process that takes an average of 50 days, according to the 2021 Origination Insight Report by ICE Mortgage Technology. For lenders, that means that there are dozens, if not hundreds, of applications to process simultaneously, leaving the door open for oversight — or worse, fraud. To avoid the potential pitfalls of human error, qualifying a large number of buyers requires automated application monitoring assistance, especially when one in 131 mortgage applications had indications of fraud in the second quarter of 2022.

While fraud rates have declined in recent quarters, the state of the U.S. economy, coupled with the highest interest rates in decades, concerns industry experts.

“Income fraud risk remains a top concern for lenders, but there is a rising focus on property value risk as home prices slow their growth and homes are taking longer to sell,” said Bridget Berg, a principal in Fraud Solutions at CoreLogic.

Undisclosed Debt Is Preventable When Identified Early With Application Monitoring

Slower market growth means that lenders can pay more attention to the details in each individual application, which is an important consideration for borrowers since approving loans requires lenders to check dozens of boxes. While verification of income and employment is critical, another concern is a potential borrower’s outstanding debt. Accounting for debt is one box every lender should be sure to check on an application. Otherwise, a lender may find themselves buying back a loan, something no lender wants.

While undisclosed changes happen on credit reports, it is not always the case that borrowers are intentionally misleading their lenders. However, a lack of knowledge or even something as simple as a well-meaning financial gift to a loved one can put the brakes on a loan and even result in the inability to close a transaction altogether.  

Buying back a loan that was derailed, whether due to fraud or oversight, can be expensive. For example, for every $1 of fraud, it costs $5.34 to recover that money, according to LexisNexis’ True Cost of Fraud for Real Estate Study. Therefore, it is in a lender’s best interest to be able to warn a borrower if there are risks that may disqualify an application. Credit reports are only the first step in this process. A more impactful step is application monitoring.

Since it can take nearly two months from loan submission to close, there is an opportunity during what is known as the “quiet period” for prospective borrowers to accrue additional debt without a lender’s knowledge that can potentially disqualify their original application. For lenders to gain insight during this period, they need access to debt-monitoring systems that detect changes to credit profiles and new credit inquiries that are not yet reported as new debt.

Quality Borrower Verifications Are Critical for Long-Term Repayment Prospects

The challenges associated with fraud do not disappear after the initial closing of a loan. Typically, “fraud for housing” is a scenario that occurs prior to closing and involves a falsified application to obtain a loan for a home that is out of a buyer’s budget. On the other hand, “fraud for profit” is an undertaking that involves disreputable homebuyers stealing cash and equity by swindling lenders and homeowners.

In both cases, lenders want to be aware of any potential discrepancies in a loan. To facilitate holistic application monitoring, CoreLogic provides simultaneous monitoring solutions with Loan Safe Fraud Manager and Loan Safe Risk Manager, which can integrate data into a single report for easy applicant monitoring.

Maintaining oversight throughout the life of the loan will only become more critical going forward. As homeownership becomes more expensive and rising interest rates make qualifying for a loan more difficult, there are indications that repayment over the life of a loan may become more challenging. In CoreLogic’s most recent Loan Performance Insights Report, data showed that delinquencies increased slightly in October, a trend that may continue should the U.S. enter a recession.

“All stages of delinquency remained low in September. Early-stage, overall and serious delinquencies were either at or below their pre-pandemic rates,” CoreLogic Principal Economist Molly Boesel said in the November Loan Performance Insights report. “However, if the U.S. enters a recession, increases in delinquency rates can be expected.”

To prepare a defense for whatever mortgage fraud trends the market has in store, lenders should design their offensive strategies using the power of technology to provide timely updates and monitoring of the full portfolio of loans that account for the bottom line of their business.

CoreLogic provides lenders with borrower credit insights through its Loan Quality Debt Monitoring software, which was recently cited by HousingWire as a seamless solution for lenders looking to monitor credit history to share with investors post-closing.

© 2023 CoreLogic,Inc., All rights reserved.
  • Category: Blogs, Intelligence, Other Articles
  • Tags: Loan Origination, Mortgage Fraud, Qualified Mortgages
ABOUT THE AUTHOR
Mortgage Team
Mortgage Team
View Profile

Related Posts

Appraisal Waiver
Blogs

How New Appraisal Waiver Policies Affect Old Homebuying Practices

Electing to accept an appraisal waiver may make the difference between closing on a loan and getting stuck in a repeat bidding cycle.

January 27, 2023
Nov2022LPIPromo
Blogs

Loan Performance Insights – January 2023

While the overall U.S. mortgage delinquency rate declined year over year in November, 18 metros saw at least slight upticks.

January 26, 2023
Magnifying glass in front of wooden cut outs of homes
Core Conversations

Appraising PropTech Innovation: Do Short-Term Changes Have Long-Term Effects?

Host Maiclaire Bolton Smith sits down with CoreLogic Chief Appraiser to learn about how banks are leveraging PropTech to determine the worth of a home, as well as the consequences that innovation has on markets, loans and affordability.

January 25, 2023

About Corelogic

  • Newsroom
  • Leadership
  • Careers
  • Ethics & Compliance

Accounts

  • Products Sign-in

Contact

  • Sales Contact
  • Product Support

Regions

  • CoreLogic Australia
  • CoreLogic New Zealand
  • CoreLogic UK

Follow & Connect

  • Facebook
  • Instagram
  • Linkedin
  • Twitter
  • YouTube
© 2023 CoreLogic. All rights reserved.
  • Legal
  • Privacy Policy
  • CCPA
  • Security
  • Sitemap
  • Accessibility
  • Legal
  • Privacy Policy
  • CCPA
  • Security
  • Sitemap
  • Accessibility