Lenders Urged to Join Forces to Fight Fraud

Lenders must band together to bar fake loans from coming in their doors, an admitted rookie to the mortgage business said at the SourceMedia Mortgage Fraud Conference in Las Vegas.Mark Nelson, who became senior vice president of risk management at JPMorgan Chase Bank less than a year ago, said lenders should follow the lead of the credit card and deposit industries by sharing data with each other. "If we put our collaborative brains together, we could put a big dent in what's happening to the industry," he said. While stressing that he's not a lawyer, Mr. Nelson said the perception among lenders that they cannot share data is wrong. Gramm-Leach-Bliley specifically allows data sharing as long as certain controls are put in place, he said, urging lenders to join industry coalitions aimed at fighting what by all accounts is a massive and growing billion-dollar-a-year problem. According to Jeffery Taylor, managing director of Digital Risk, Dallas, the number of mortgage fraud reports has jumped six-fold in the last five years, from 3,500 in 2000 to 27,000 in 2005. And that's just what's been reported, he emphasized, noting that much of what's taking place is slipping under lenders' radar screens. Mr. Taylor also pointed to another sobering statistic: That according to the FBI, roughly 80% of the losses attributed to fraud involve either collaboration or collusion by industry insiders. "If that's true," he commented, "it doesn't speak well for what we have in place to combat the problem."