SAN DIEGO — First American CREDCO has introduced a consumer reporting solution it claims helps financials perform a faster and more accurate risk analysis on mortgage loans.
Called the Encore report, the web-based or integrated solution delivers risk analytics on critical elements of the mortgage application and servicing processes, including applicant credit risk, identity verification, applicant income and employment verification, and subject property and market data.
According to John Bauer, EVP-business development for First American CREDCO, the report delivers "a 100% decisionable, 360-degree risk view of the consumer and lending transaction. The new realities of the mortgage market are driving this. It gives financials the ability to focus on the right loans. A few years ago, when we were more focused on simply processing loans, there wasn't a need for a lot of additional scrutiny."
But, added Bauer, with buyback provisions, fraud being up, and greater concerns about negative amortization, there is a need in the marketplace for better tools to deal with assessing the risk of a mortgage loan as quickly as possible. "The decision on whether the loan is a good loan needs to be made sooner, closer to the point of sale than near closing time. If the credit union finds out late in the process the consumer does not qualify, now it has an unhappy member and has wasted a lot of processing time."
What's unique about Encore, Bauer contended, is that all of the information on the consumer and property appear on a single screen. "Many lenders are doing this work now, but at 18 points along the lending cycle. Then, they are taking all this information and dumping it over to a core processor that is then trying to look at all these different pieces of information and relate them together. With Encore I can look at all this data at one time and say, 'OK, this looks like a good deal or it does not."
Encore also checks for mismatches. Bauer added that Encore pulls credit reports from the three major bureaus and queries First American collateral data. "Maybe the borrower is currently in foreclosure on an existing property and that is not being reflected on the credit report. But Encore will show that. It will also go to aggregators, such as LexisNexis ChoicePoint. It can get a transcript from the IRS or go to the Social Security Administration and verify Social Security data directly with them."
Bauer said Encore also streamlines data, eliminating duplications. "For example, if you query an individual and find a Social Security alert from the credit bureau, another from the fraud source, and another from the collateral report, Encore will delete the variations and only present it once from the best data. It will also associate whether it's a high, medium, or low alert. And it will do that based on our own criteria — or the report can be customized by the credit union's own criteria-and say what the recommended actions are to clear it."
The solution is web-based or can be integrated with most loan originations systems, Bauer said. "However the credit union is ordering its credit report today, it can use that same integration to order Encore. There is some customization that has to happen to feed its systems. The credit union can also go online to credco.com and order a report."
