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Vendor of the Month
Do you need to perform due diligence on an individual or company? Are you concerned about trademark infringement with your company's new name? These are just a few of the needs that can be met using business information solutions from CBCInnovis, Inc., one of the many vendors available on eMagic. CBCInnovis serves more than 50,000 customers and offers a variety of solutions from credit reports to fraud detection. Order CBCInnovis services through eMagic.

Puzzle Winner Announced
Curtis McMullen from 1st United Financial in Port St. Lucie, FL, was last month’s survey drawing winner. He won a basket of eMagic goodies.

What You Should Know about Credit-Ordering
Coming in March, credit reports ordered separately from an AU order will be available only through eMagic.com, and not through eMagic-hosted lender sites. You'll need to order credit as part of your AU service or use the credit reference number if ordering from an eMagic-hosted lender site. Click here to learn more about ordering credit directly through eMagic.com.

Meet us at:
FAMB - Florida Association of Mortgage Brokers - Broward
Broward Convention Center
February 20, 2008
eMagic/Myers

MAMB - Maryland Association of Mortgage Brokers
Baltimore Convention Center
March 11 - 12, 2008
eMagic

NJAMB - New Jersey Association of Mortgage Brokers
25th Annual Regional Conference
Trump Taj Mahal
March 19 - 20, 2008
eMagic/Myers

Editor: Gretchen Theisen
Writer: Tyler Gaskill
Designer: Heidi Roberts

We welcome your ideas! feedback@emagic.com

News & Views is a monthly publication of eMagic, an MGIC company. This newsletter is designed to keep you informed of eMagic technology platform enhancements and mortgage industry news that you can use.

eMagic®, and Everything. Made simple.™ are trademarks; and Trio^SM is a service mark of eMagic.com, LLC, an MGIC company. DO Express is a service accessing Desktop Originator®, a registered trademark of Fannie Mae. DU Express is a service accessing Desktop Underwriter®, a registered trademark of Fannie Mae. LP.com is a service accessing Loan Prospector®, a registered trademark of Freddie Mac.

Too Good to be True is a Red Flag

If you started getting checks in the mail for $7,000 after joining a risk-free investment group that required no financial obligation, it would seem too good to be true. One Virginia resident thought so after receiving two $7,000 checks from his investment group. But when he got phone calls demanding he make mortgage payments on properties he’d never heard of, he discovered his investment group wasn't risk-free.

In 2005 alone, it was estimated that fraud cost the mortgage industry a billion dollars. The average cost to the lender is 33 percent of the loan amount. And it doesn’t matter where you live, fraud is reported in all 50 states.

In today's tight market, originators and lenders need to prevent defaults by being more diligent in detecting fraud. Changing times and technologies make it easier for fraud to slip through the system. Boom markets mask it and slow markets expose it.

Fraud is often committed by a well-intentioned, unqualified, borrower or a network of insiders. Forty-five percent of fraud cases have red flags present at pre-closing. Red flags do not automatically mean the loan is fraudulent, just that you should dig deeper and get verification, explanations, or more details. Fraud comes in many varieties, each with its own dangers and red flags.

Common Types of Fraud

Asset Fraud - Assets are exaggerated to qualify for a loan they would otherwise be denied. Extreme cases include "renting assets." Red flags for asset fraud include: a new account, round dollar balance, account not in borrower's name, account held jointly with a 3rd party and significant balance changes during the weeks/months surrounding the 1003.

Document Misrepresentations - This includes falsifying or misrepresenting any required loan documents. A few Red flags for document misrepresentations include: income is inconsistent with job; age inconsistent with years employed; combined income, but only one name on the loan; 1003 debt does not equal credit report debt.The top five documents altered are:

• Applications (55%)
• Tax and Financial Statements (22%)
• Verification of Deposit (16%)
• Appraisals/Valuations (14%)
• Verifications of Employment (13%)

Appraisal Fraud - Appraiser falsifies information or inflates property value by altering comparables or not disclosing detrimental conditions. This could also include falsely impersonating a licensed appraiser. Red flags include: all comparables adjusted in same direction, sales contract dated after the appraisal, photos don't match description and appreciation in stable or declining markets.

Investment Scams - These are well-organized scams involving a network of industry professionals and "recruiters." Promises of wealth and free money are often made with assurances of no risk involved. Red flags for investment scams include: a number of oddly similar loan files submitted by the same originator, inflated appraisal or sales price, cash back at closing, intermediaries involved in the transaction are "property-finders" and not easily identified, intermediaries not named anywhere on the loan except for HUD-1.

For more information on how to protect your business by preventing mortgage fraud, sign up for our Fraud Detection class. Visit our eTrain page and scroll to the bottom.

Did You Know?
Oops. You accidentally locked yourself out of eMagic. It's time for a call to customer service, right? Wrong. You can quickly reset your password online! The only thing you need to do is make sure your e-mail address is your own. Log in to eMagic, access the My Profile screen, and update your e-mail address.

Don't Forget
You can access emagic.com and all your approved lender sites with your single login ID and password.

Survey results:

From last month’s survey results, we learned most of you are independent learners and are split between goofy and clever senses of humor. Last month’s survey results are listed below, not that you need us to tell you.