Appintell Tailors Fraud Tool For Freddie Mac
Appintell here has customized its DISSCO fraud tool for Freddie Mac. The new version of the fraud-detection application is called SHERLOQ.
As part of the agreement, Appintell will retain ownership of the new SHERLOQ product and plans to embark on an aggressive campaign to market the application to the industry at large. "We've been working with Freddie for about a year-and-a-half on this project," said Stephen Gott, chief executive officer at Appintell.
"The first part of the process was testing our product to ensure that it caught the required amount of fraud," he noted. "The second phase was creating a pilot system that we could customize to meet their specific needs, which we named SHERLOQ."
In comparing SHERLOQ to DISSCO, there are some noticeable differences that were shaped to accommodate Freddie's needs. "Freddie wanted to score loans differently then we had in the past," said Mr. Gott. "In the pilot phase, we tested it with several of their customers and they ultimately decided to go with us on a permanent basis. Essentially what that means is that Freddie is going to be using the product internally in all of their departments to catch fraud."
Additional differences include how each product verifies the borrower's employment. "We go out to a variety of sources to get employment data in DISSCO and Freddie wants to go with a 4506 from the IRS as their required verification of employment, which is only one option we provide our normal user through DISSCO," Mr. Gott said. "It's optional for us and mandatory for them.
"Also, DISSCO provides a pass or fail determination with a score and SHERLOQ provides that determination without a scale," he continued. "Freddie's version uses customized red-flag variances. In addition, Freddie uses a 4506 to score business data and not our product so there is no scoring of business data in SHERLOQ."
Going forward, DISSCO provides an AVM with a probable value and confidence score and SHERLOQ does not, according to Mr. Gott. "SHERLOQ organizes the variance for high- and low-impact status by degree of severity and DISSCO separates them," he reported. "SHERLOQ has conditioned resolution tracking that bundles the history of the loan. Also, the aesthetics are quite different."
Over the past two years, Appintell and Freddie have created a symbiotic relationship to get this product right, and Freddie, for one, is very happy with the result. "SHERLOQ will be one of many fraud tools that we use," said Patricia J. Boerger, a spokesperson from Freddie. "In our decisioning process, we were essentially looking for a fraud product that can do multiple checks at one time, one that can analyze both borrower and property data, which SHERLOQ does do. From that point we worked with Appintell to create some customization that we were looking for in a fraud application."
Appintell believes that Freddie's acceptance of the fact that fraud is on the rise will send a clear signal to the industry. "Fundamentally most lenders are aware that as volume goes down there will be the potential for the quality of loans to deteriorate," said Mr. Gott.
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