Equifax Inc has launched a borrower misrepresentation solution for hidden debt and an insurance program that protects lenders against losses often stemming from mortgage repurchase requirements through Arthur J. Gallagher & Co.
By covering losses tied to loan repurchases resulting from undisclosed debt, this solution enables lenders to reduce taxable loan loss reserves and improve the confidence level of originators, investors, and mortgage insurers in the underwriting process.
Equifax's Undisclosed Debt Monitoring is the mortgage industry's only platform to monitor for and notify lenders of new accounts and borrower activity initiated during the pre-funding period. Through the monitoring process, the platform alerts lenders of borrower activity that may result in a loan becoming ineligible for delivery to investors and impacting the risk profile of the transaction due to a borrower's misrepresentation of their financial picture.
"With concerns over loan repurchases still overshadowing the mortgage market, the industry is adopting innovative solutions to prevent the origination of 'stated liability loans' and make losses associated with undisclosed debt a thing of the past," said Steve Meirink, Equifax mortgage growth initiatives leader. "Through our relationship with Arthur J. Gallagher & Co., we have found a simple, yet unique way to bridge a gap in the mortgage market by offering lenders a ground-breaking solution that can help lower loss severity rates, reduce reserve requirements and restore long-term confidence in the mortgage origination process."