Technology

Wells Fargo is the newest lender to implement First American CoreLogic's LoanSafe Fraud Manager in order to minimize loss from fraud and increase operational efficiency, according to First American Core Logic, Santa Ana, Calif. In addition to Wells Fargo, the technology tool is now in active evaluation with 10 other lenders, signaling significant market momentum for the solution and continued lender focus on solving the mortgage fraud problem. First American CoreLogic fraud scientists have created patented fraud models that assign each loan a fraud risk score spanning from one (lowest risk) to 999 (highest risk). By using these scores, lenders can realize revenue increases through quicker and more efficient underwriting and increase revenue by reducing default and foreclosure-related losses associated with fraud. The solution now also offers improved reporting with more loan information categories displayed and alerts grouped by likely fraud types. Additionally, this new fraud detection solution offers more input fields for greater functionality and tracking. The First American CoreLogic 2X guarantee promises that lenders will save twice as much in fraud losses as they did prior to using LoanSafe Fraud Manager and the savings will be at least twice as much as the cost of the solution.

Lender Processing Services says it has corrected the way it processes assignments of mortgages in foreclosure cases, which has drawn the attention of class action attorneys and a U.S. Attorney in Florida. The Jacksonville, Fla., company said an internal review of its Docx LLC subsidiary "identified a business process that caused an error in notarization of certain documents, some of which were used in foreclosure proceedings in various jurisdictions around the country." The U.S. attorney's office for the middle district of Florida is conducting an inquiry of the matter. LPS is "fully cooperating" with the U.S. Attorney, a spokeswoman said. In February, a class action lawsuit filed against Deutsche Bank (National Trust Bank) and U.S. Bank N.A., LPS and Docx alleged that the practice of creating assignments months and years after the actual date of the transfer from one owner to another is unlawful. The plaintiff's attorneys have dropped the lawsuit. However, the lawsuit pointed out that LPS and Docx assists Deutsche Bank (National Trust Bank) and U.S. Bank N.A., in filing foreclosure actions. LPS also has responded to an inquiry by the Clerk of the Court of Fulton County, Georgia. "LPS has since completed its remedial efforts with respect to all of the affected documents and believes the Clerk of Court has completed its review and closed the matter," LPS said.

The Treasury Department could move faster in modifying second liens, a mortgage securities analyst says, by requiring servicers to conduct their own internal matching of first and second liens. Using their internal systems, Home Affordable Modification Program servicers could "capture approximately half of the second liens backing modified first liens," according to an Amherst Securities Group report. However, Treasury has contracted with Lender Processing Services to build and maintain a database of second liens that may be eligible for the HAMP second lien modification program (2MP). Servicers are required to use LPS to identify eligible matches. The LPS matching project is "far more cumbersome than it needs to be," said ASG senior managing director Laurie Goodman. "This unnecessarily delays the implementation of the 2MP program to the benefit of the second lien investors which are the largest banks," Goodman said.

At a briefing of state housing counselors, Congressman Steny Hoyer and Maryland Department of Housing and Urban Development Secretary Raymond Skinner both expressed their support for HOPE LoanPort, the new counselor Web-based tool that streamlines submission of completed loan modification applications, including those used for the Home Affordable Modification Program. This effectively makes Maryland the first state in the nation to publicly endorse the HOPE LoanPort program. In a room full of Maryland housing counselors, mortgage servicers, state officials and others; Congressman Hoyer praised housing counselors for their efforts and Secretary Skinner discussed the need for improved technology in assisting at-risk homeowners with loan modifications. HOPE LoanPort currently has eight mortgage servicers and more than 100 nonprofit counseling organizations across the country committed to its program.

HOPE LoanPort, the new counselor Web-based tool that streamlines submission of completed loan modification applications, including those used for the Home Affordable Modification Program, has named six people to serve on its board of directors. The organization also named its CEO. There are plans to expand the Board in the near future to reflect the diversity of the organizations involved with this web portal initiative. Larry Gilmore, currently the deputy director of the HOPE NOW Alliance, will assume the day-to-day management of HOPE LoanPort. The following individuals will make up the board of directors: William Longbrake, an executive in residence at the Robert H. Smith School of Business at the University of Maryland where he works on a variety of business, policy and governance issues; John Dalton, former Secretary of the Navy in the Clinton administration; John Courson, the president and CEO of the Mortgage Bankers Association; Faith Schwartz, the executive director of HOPE NOW; Kenneth Wade, the CEO of NeighborWorks America, a public nonprofit corporation established as the Neighborhood Reinvestment Corp. by an Act of Congress in 1978; and Camillo Melchiorre, senior vice president of loss management for Radian Guaranty Inc.

CitiFinancial, a nonbank that was once a powerhouse in subprime lending, Wednesday agreed to pay a $1.25 million fine for not correctly reporting its residential origination data to the Federal Reserve via the Home Mortgage Disclosure Act. The settlement, however, was not between the Fed and CitiFinancial but instead was worked out by state banking supervisors who discovered the reporting problems as part of a probe into compliance with consumer protection laws. The deal was worked out between CitiFinancial, an affiliate of Citigroup, and The Conference of State Bank Supervisors/American Association of Residential Mortgage Regulators. (Roughly 35 states were party to the agreement.) The reporting violations occurred on 91,127 loans between 2004 and 2007. Prior to that, the lender was in compliance, regulators said. According to CSBS, CitiFinancial of Baltimore, failed to report the loans in its HMDA filings. The lapse was caused by "internal system errors" at the nonbank, said CSBS. CitiFinancial eventually submitted HMDA reports on the loans in question. Regulators said that even though the loans were omitted by CitiFinancial the lender's behavior "does not in any way demonstrate a pattern or practice of discriminatory lending." The loans accounted for about 10% of CitiFinancial's production volume during the time in question.

MRG Document Technologies in Dallas, a provider of mortgage document preparation, has been named a RegulatorConnect Certified Partner by ComplianceEase, which means that lenders can use the company's solutions to prepare loan data for industry standard electronic submission to state regulators for examinations. MRG's Miracle Online was certified by ComplianceEase due to its examination data export functionality as well as its integration with ComplianceEase's ComplianceAnalyzer product. This enables the electronic transfer of compliance audits to state regulators. "As the regulatory landscape continues to become more complex, it is vital for lenders to have automated processes in place in order to comply with state and federal regulations," said Laura LaRaia, an attorney and director of customer service at MRG.

Certain deficiencies in the reconciliation process for AH Mortgage Advance Trust 2009-ADV have led Moody's Investors Service to put the servicing advance facility's ratings on watch for possible downgrade. Potentially affected are up to $225 million in securities issued in the deal, which are backed by reimbursement rights for servicing advances that America Home Mortgage Servicing Inc. makes on certain residential mortgage-backed securities. The rating action reflects concerns about "a significant number of aged reconciliation items outstanding" in AHMSI's custodial bank accounts. AHMSI said reporting inconsistencies between two different technology systems are involved and at the time of this writing it had most recently estimated it would be able to fix the problem in four to six months. Reconciliation items, or discrepancies between cash book/loan level records and those shown on monthly bank statements, are "not uncommon," Moody's said. But "servicers will typically resolve such items within 30 days of being identified," the rating agency said. "As items age beyond 30 days or more, the probability that either the servicer or the SAF may suffer a loss increases, although there has been no evidence of this from items cleared to date," Moody's added. In addition to the age and number of the items, the rating agency is concerned that "even as AHMSI has cleared a large number of outstanding items, new reconciliation items have been created."

Jacksonville, Fla.-based LOS MortgageFlex Systems Inc. has formed a strategic alliance with secondary market analytics firm Precision Risk Management Systems Inc. Through this partnership, MortgageFlex customers will gain new financial capabilities, including point-of-sale and delivery of loans into the secondary marketing through a fully managed lender pipeline. Precision Risk also offers what the company calls a "Precision Managed Hedge Service," for lenders who would like to improve their secondary marketing execution and extend their expertise without adding staff.

Lender Processing Services has launched a new short-sale service to help mortgage firms handle their growing caseload of REO properties. The Jacksonville, Fla.-based vendor is offering the service through its Asset Management Solutions division. The company oversees a network of asset managers to market and sell distressed and depository-owned properties. The unit performs such functions as reviewing title, resolving junior liens and reviewing property values against short-sale offers. In other short-sale news, Loan Resolution Corp., Scottsdale, Ariz., said it is hiring 100 new workers this month to meet demand for the Treasury Department's new Home Affordable Foreclosure Alternatives program. LRC says it needs the additional workers to meet "unprecedented growth as demand for short sales and deed-in-lieus skyrockets." The vendor moved into a 30,000-square-foot office in North Scottsdale in September 2009. The new positions range from executive slots down to entry-level positions including asset managers.