There's no better sign of how the mortgage market's atmosphere has changed than what potential borrowers are hearing from Ameritrust. "We let them know up front that we are trying to close loans less quickly so all information on the application can be validated," says John Owens, CEO of Ameritrust in Charlotte, where the lender's closings take about two weeks longer than a couple of years ago — even with the deployment of new data management technology that processes more consumer application information in less time. "We are making sure that all information gets verified before closing. We are trying to make it difficult for anyone who's trying to commit fraud."

Mortgage fraud was rampant during the boom — the number of borrowers that defaulted on FHA-backed mortgages before making a single payment has tripled in the past year according to federal data, a trend suggesting the initial applications contained suspect information. "With unemployment increasing, verifying income is going to be extremely important, as is the need to do it in a way that's cost effective," says Mike Cook, co founder of ID Analytics in San Diego, who says lenders should try to gather as much verification information as possible from a few sources as possible.

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