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BasePoint Integrates Fraud Review With Bohan Group's Due Diligence Process
By James Comtois
With mortgage fraud on the rise, investment banks and due diligence companies are increasingly seeking improved fraud scoring technology, advanced risk analytics for finding the loans needing review and a faster process to weed out inconsistencies.
As a means of helping investment banks uncover portfolio fraud risk, BasePoint Analytics, a provider of predictive analytic fraud and risk management services, has integrated its Enhanced Fraud Review with Bohan Group LLC's residential mortgage due diligence process to quickly and efficiently identify loans with high fraud risk within an investment bank's existing loan portfolio.
By using this newly integrated process in combination with BasePoint's FraudMark for Investment Banking scoring service, investment banks can identify those loans within their portfolio that have a high likelihood of default due to egregious misrepresentation in the original loan application.
This identification of at-risk loans helps the investment banks begin appropriate treatments right away, often before delinquency occurs.
Bohan Group was founded in 1995 to provide risk analysis and transaction support services to the capital markets, including investment banks on Wall Street. The firm's due diligence services extend to a variety of asset types including all residential mortgage products as well as nonperforming loan products. As a strategic partner of First American CoreLogic, Bohan Group has managed more than 6,000 transactions totaling more than $400 billion.
BasePoint's FraudMark is a fraud score that can be used to evaluate each loan within an investment bank's portfolio overnight. The investment bank's portfolio is rank ordered using the FraudMark score, with the riskiest loans receiving the highest scores.
Additionally, BasePoint provides the investment bank additional analyses that rank order fraud risk by lender, loan type and other key criteria selected by the investment bank. The investment bank then uses this risk ranked data to create a targeted and selective sample for the Enhanced Fraud Review.
Once the loan sample is selected, a team of BasePoint-certified Bohan due diligence analysts uses BasePoint's Enhanced Fraud Review in conjunction with Bohan's BRAIN system to confirm whether significant misrepresentations are present in the original loan files, indicating fraud. This enables Bohan to leverage BasePoint's FraudMark scoring technology so that they can perform the most effective review on high-risk loan files to confirm potential fraud quickly.
During the past several months, BasePoint has identified more than $900 million in high-risk loans for five major investment banking firms.
The Bohan Group, according to its president Mark Hughes, "found that BasePoint's FraudMark scoring and Enhanced Fraud Review help guide our due diligence underwriters through a targeted process to investigate high-risk loans, confirming misrepresentations more quickly. BasePoint's specialized fraud review training for our employees also substantially speeds up the process of confirming misrepresentations in high scoring loans, providing real savings to our mutual clients."
Automatically assessing the fraud risk in a total portfolio, within a pool of loans available for sale, or at the individual loan level so that those with the highest associated fraud risk can be selected for further investigation during the due diligence process enables investment banks to dramatically decrease fraud risk in their investment portfolios.
"Investment banks and due diligence companies such as Bohan Group are increasingly turning to BasePoint to provide fraud scoring technology, advanced risk analytics for pinpointing the loans needing review and an expedited process to confirm misrepresentations," said Tim Grace, president and CEO of BasePoint in a statement.
Mr. Grace added that BasePoint is excited to work with Bohan Group to help investment banks "effectively pinpoint fraudulent mortgage loans that should not be purchased."
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