Insurance Services Office Inc., which has acquired two automated protection services vendors this year, has put its combined offerings together under a new unit aimed specifically at lenders and other mortgage market participants.
To create the unit, ISO bought Sysdome Inc. last week and AppIntelligence Inc. in January.
Kevin Coop, the head of the unit, ISO Mortgage Analytics, said in an interview Monday that two types of marriages of data would be an important part of the business model.
First, the information acquired from Sysdome and AppIntelligence will be used in coordination with the Jersey City parent's database of 9 billion records, many of them useful in fraud detection, he said. The ISO database includes criminal records that can be used to uncover rogue loan officers, for instance.
A desire to take advantage of such synergies was part of the reason ISO went shopping for automated protection providers, according to Scott Stephenson, an executive vice president.
Also, Mr. Coop said the unit will gain by combining the information compiled by AppIntelligence, of Weldon Spring, Mo., with the information compiled by Sysdome, of Calabasas, Calif. (He had been Sysdome's president and chief operating officer before the purchase.)
"You're taking the two companies that were providing, really, the largest front-end quality control products, and every application that has passed through either system, it appends to that system," he said.
"If you take those two databases and merge them together," they become more effective, he said.
ISO provides data, analytics, and other products for risk management in insurance, finance, real estate, health services, government, and human resources.
Each acquisition brought 500 or so customers, including many of the country's largest lenders. ISO did not say how much it paid for either Sysdome or AppIntelligence.
Several companies have been expanding or starting mortgage fraud prevention operations, often because they are seeking opportunities to leverage databases built for other uses. In 2003, ChoicePoint Inc. of Alpharetta, Ga., bought Mortgage Asset Research Institute Inc., a company focused solely on preventing fraud by mortgage professionals.
ISO Mortgage Analytics is ISO's first unit focused solely on serving lenders and other mortgage market participants. However, companies in the industry, such as Fannie Mae, have used services from older ISO units, such as property surveys and modeling of natural-disaster risks.
ISO has pledged to customers of the predecessor companies that it will support both product sets for the foreseeable future - even though in some cases, they do similar things.
"Our 'job one' is to protect every customer's investment," Mr. Coop said.
Mr. Stephenson said ISO does not expect to make any similar purchases, but it expects to expand the unit as more lenders sign on.
"It does leverage the strengths that we've got, but because we see it as a growth opportunity, it's a place that we intend to be investing," he said. "I hope and expect what the market will see coming out of that is a stream of very innovative products."
ISO has been looking to expand its fraud prevention business - which has long been focused on the insurance industry - for about a year, Mr. Stephenson said. It has expanded its focus to cover areas such as health-care fraud, he said.
In some ways, mortgage fraud is tougher to combat, he said. "In the insurance industry, most of the fraud is perpetrated by the insured. In the mortgage industry, a lot of the fraud is being perpetrated not by the borrower, but by intermediaries, and so, if anything," there's a higher level of sophistication among those committing the fraud.
