Interthinx, Inc., a provider of risk mitigation, mortgage fraud prevention, and regulatory compliance tools for the mortgage industry, said Wednesday that it had rolled out a new risk tool for originators focused on identifying occupancy fraud and ownership misrepresentation by would-be borrowers. Aavailable through the company’s FraudGUARD platform, the new module can detect undisclosed properties that can skew debt-to-income ratios, and discover investors who falsely claim owner occupancy status in loan applications. Detection of these misrepresentations gives lenders the opportunity to investigate and avoid mispricing loan products before a loan is funded, the company said in a press statement. “Borrowers misrepresenting occupancy status is one of the most common types of mortgage fraud, representing slightly more than 10 percent of the applications scored by FraudGUARD as ‘high risk,'” said Stacey Louie, senior vice president of product development and engineering for Interthinx. Occupancy fraud occurs when borrowers try to disguise an investment property by representing it as the primary residence. Because lenders typically charge a higher interest rate for non-owner-occupied properties, the false representation results in the lender underestimating the risk, mispricing the loan, and being overexposed to loss. Inaccurate borrower debt-to-income ratios — a related form of borrower misrepresentation — can stem from undisclosed properties. Since debt-to-income ratios are a crucial underwriting criterion used to determine eligibility for most mortgage loans, misrepresenting occupancy and omitting other borrower-owned properties artificially lowers the debt ratio, which can lead to a borrower fraudulently qualifying for a larger loan or a lower interest rate. The new occupancy and ownership module of FraudGUARD analyzes detailed borrower ownership data from deed and assessment records and helps lenders assess a borrower’s ownership history with interactive timelines. “One of our many goals is to consistently provide our customers with crucial and digestible data to help them make the most informed lending decisions based on borrower activity,” said Kevin Coop, Interthinx president. For more information, visit http://www.interthinx.com.

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