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DataQuick: Intelligence Solutions To Combat Short Sale Fraud

DataQuick: Intelligence Solutions To Combat Short Sale Fraud

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Published by thomascruse
The real estate market collapse of 2007 brought with it an unprecedented number of
distressed properties that in most cases require careful disposition planning to minimize losses. Short sales have become one of the most popular and effective strategies to achieve this objective providing borrowers a graceful exit and lenders, loan servicers and investors a “least bad” resolution.

However, with the onslaught of short sales has also come a wave of fraudulent activity.
The real estate market collapse of 2007 brought with it an unprecedented number of
distressed properties that in most cases require careful disposition planning to minimize losses. Short sales have become one of the most popular and effective strategies to achieve this objective providing borrowers a graceful exit and lenders, loan servicers and investors a “least bad” resolution.

However, with the onslaught of short sales has also come a wave of fraudulent activity.

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Published by: thomascruse on May 13, 2013
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 Intelligence Solutions to CombatShort Sale Fraud
Transforming Information into Intelligence™ 
DataQuick
sales@dataquick.com1-888-299-8787www.dataquick.com
Data & Analytic Best Practices
 
Transforming Information into Intelligence™ 
www.dataquick.com
Copyright © 2013 DataQuick
2
Overview
Te market collapse brought with it an unprecedented number o distressed properties that in most cases require careul dispositionplanning to minimize losses. Short sales have become one o the mostpopular and eective strategies to achieve this objective providing borrowers a graceul exit and lenders, servicers and investors a “least bad”resolution. However, with the onslaught o short sales has also come awave o raudulent activity. As short sales have increased in number, sotoo have short sale raudsters. In act, the Financial Crimes EnorcementNetwork reported that in 2012, 10% o the 100,000 suspicious activityreports fled relating to mortgage raud were classifed as short saleraud, up signifcantly rom 2011. In addition, a recent DataQuick studyound that 6.5% o all short sales had some type o suspicious activity.While no such suspicious activity was reported the previous year. Tereare, however, many strategies lenders, servicers, and investors can use tocounter the eorts o raudsters. Some o the most eective approachesleverage advanced data and analytics solutions to identiy likely raudhotbeds and more eectively target and respond to potentially raudulentactivity in real time.Tis best practices guide will ocus on fve intelligence solutions that canbe deployed now to combat short sale raud:
Understandactivitylevelstoknowmarketswithgreatestfraud
potential
•Knowthefraudsterprole•Implementearlywarningtriggers•Knowwhat’srightbeforetheoerismade•Leveragetechnologytoquicklyevaluatetheoer
Introduction Page 2Best Practice #1 Page 3Best Practice #2 Page 5Best Practice #3 Page 6Best Practice #4 Page 9Best Practice #5 Page 10Conclusion Page 11
Contents
 
Transforming Information into Intelligence™ 
www.dataquick.com
Copyright © 2013 DataQuick
3
Understand Activity Levels to Know Markets with Greatest FraudPotential
Tis is the most general o the fve strategies, but it also provides the oundation or all o the other strategies you may
deploy.Quitesimply,it’snecessarytohaveaconstantowofmarketintelligencetounderstandwhereshortsalefraud
activity is most common. You must know where you have to be most vigilant.DataQuick utilized its RiskFinder Distress product to identiy 205,177 short sales during the past two years in 14 o the
largestU.S.countiestoprovideageneralgeographicactivityroadmap.Avarietyofkeybasetrendsemergedfromthis
analysisFigure 1 indicates where short sale activity is most common (i.e. where a heightened sense o raud awareness is required).Specifcally, short sales are, by ar, currently most common in Wayne County, MI. O the remaining counties, short salesappear to be more concentrated in Western counties than those in the East, although the short sale craze has clearlysubsided in Clark County, NV.
Source: DataQuick Neighborhood Level HPI
Figure 1Short Sales as a Percentage of All Sales
Los Angeles, CAHennepin, MNMiami-Dade, FLSan Diego, CAMaricopa, AZBroward, FLClark, NV
26%38%20%19%19%15%15%10%
Wayne, MI
40%30%20%10%0%
Source: DataQuick’s RiskFinder Distress

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