Firm Launches Short Sale Monitoring Solution

By Natalie Dolce

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Grace

SANTA ANA, CA-CoreLogic, a provider of consumer, financial and property information and business services, have launched a short-sale fraud prevention and pricing solution, called Short Sale Monitoring Solution. The new service allows lenders to receive alerts on “risky” pending and closed short sales to minimize unnecessary losses related to fraud and property underpricing, which CoreLogic estimates at $41,500 per transaction.

Short Sale Monitoring Solution provides real-time access to lenders’ concurrent transactions on short-sale properties through the CoreLogic Mortgage Fraud Consortium, what it deems the largest repository of application and transaction data, representing 65% of annual loan applications.

“Short-sale fraud is costing lenders $310-million a year and those losses may increase if lenders cannot proactively identify risks in real time,” says Tim Grace, senior vice president of Fraud Analytics, CoreLogic. “Prior to our solution, lenders were disadvantaged by not being able to cross reference pending loan applications on the same property. Our Short Sale Monitoring Solution gives lenders unique and immediate pre- and post-closing perspectives on short-sale transactions.”

CoreLogic points out that Freddie Mac reported that it has seen short-payoff volume grow more than 1,000%, and that the upward trend in volume leaves the short-sale market ripe for fraud. To prevent short-sale fraud preclosing, CoreLogic Short Sale Monitoring Solution matches details against other pending loan applications in the consortium database and public records for the same property. When a matching record is found, an alert goes instantly to the lender, recommending a decision to delay pending further investigation. The service also has the ability to identify the entity or entities perpetrating the potential fraud.

For short sales that have already closed, Short Sale Monitoring Solution continues to watch the property for a period specified by the lender. Any subsequent loan closed on the property generates an alert to the original short-sale lender and the resale lender, if different. Although too late to avoid the original sale, the postclosing alert notifies the first lender to review sale terms for violations. It also alerts the new lender that it could be party to fraud discovered in the dual transactions.

Another benefit the solution offers, according to CoreLogic, is preventing missed-opportunity losses. Pricing properties excessively below market value allows savvy investors to resell for a sizeable profit, claiming money lenders may have inadvertently left on the table. Short Sale Monitoring Solution watches for and evaluates short-sale resales for 90 days, enabling lenders to refine pricing methods on an ongoing basis. Another option available is a retrospective short-sale analysis that allows lenders to detect fraud, assess pricing-method accuracy and pinpoint problematic geographies. Isolating and analyzing these issues enables lenders to avert future losses. CoreLogic defines short sales as risky when either the second sale amount is vastly higher than the initial short sale and/or the second sale transaction happens too soon after the first.

Categories: West, Distressed Assets, Orange County