Firm Seeks Fraud Insurance Patents
Mortgage fraud prevention specialists The Prieston Group here has filed for patents for two of its key business processes.
The patent applications cover its "Methods and System for Offering Fraud Insurance to Lenders." These applications state that TPG has created a unique business process for obtaining and issuing a policy, as well as a unique business process for evaluating the suitability and requirements of the lender to be covered by the policy.
Arthur Prieston, chairman of TPG, said, "This is the first new breakthrough insurance product for the mortgage banking industry since the introduction of mortgage insurance by MGIC [the original Mortgage Guaranty Insurance Group] in 1957.
"For the first time, there's a product that allows lenders to share their risk with thousands of other lenders around the country, as long as they adhere to the standard practices defined by our program."
The insurance processes are the result of a 10-year development cycle, working with clients and colleagues.
"The analytics were tough. Risk management is an economic decision and we had to prove the business case for these products."
For one lender, this product means being able to open its business to smaller mortgage originators.
Jumbo lender Thornburg Mortgage Inc., Santa Fe, N.M., wanted to open its correspondent channel to lenders with a smaller net worth than its tradition ally purchased loans from, said senior vice president Ron Chicaferro.
"But doing business with them can be riskier, since they may not have the capital on hand to buy back a loan if they violate reps and warrants," he said, noting that the insurance policy changes the economics of the situation. "We like sleeping at night. This lets us do that."
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