Monday, September 21, 2009

Social Security Administration Plans to Raise Identity Verification Fees by Nearly 900%

RJ Note: I can see it now-- another $4.46 on a mortgage will take the deal down. Right.

/PRNewswire/ -- Effective October 1, 2009, the Social Security Administration (SSA) will be raising its fees for mortgage and financial companies to authenticate borrower Social Security numbers from $0.56 to $5.00 per verification. This price increase could significantly impair the industry's move to protect itself against identity-based mortgage fraud.

According to a letter sent to Michael Astrue, Commissioner of the Social Security Administration by Congresswoman Kay Granger (R-Texas), this fee increase could lead to the de facto cancellation of the CBSV (Consumer-Based Social Security Number Verification) program, as it could significantly lead to fewer and fewer lenders using the program. According to that same letter, the decision to increase fees for the CBSV program was made by the Social Security Administration without collaboration with the U.S. Congress. Mr. Astrue denied Congresswoman Granger's initial request for a 60-day delay to evaluate the necessity of this fee increase.

On Tuesday, September 22, Congresswoman Kay Granger and key staff, which includes committees of oversight for the SSA, plan to meet with the Social Security Administration to discuss the negative repercussions this planned increase in fees will have on the mortgage industry and the nation as a whole, and intend to re-propose a delay in implementing these fees. Senate Majority Leader Reid, House Speaker Pelosi, House Majority Leader Hoyer and Senators Hutchinson, Harkin, Cochran and Cornyn have been contacted and are expected to support a delay in implementation as well.

"With lower loan production and lenders' increased focus on cutting costs, this fee increase could have a highly detrimental impact on the mortgage industry, as well as the U.S. and global economies," says fraud expert Jay Meadows, CEO of Rapid Reporting, the mortgage industry's largest provider of third-party income, identity and employment verification services. "While unfortunate, it's a definite possibility that lenders will avoid using these higher priced CBSV-based Social Security number authentication, even though it's a reliable way to protect against identity fraud."

Mortgage fraud has been widely recognized as a leading cause of the industry's collapse, and of the economic troubles that the nation is facing. Increasing the cost for lenders to screen for fraud could prove counterproductive to the industry's recovery efforts, particularly at a time when the industry is still struggling to repair the damage caused by fraud in the earlier part of this decade, asserts Meadows.

According to an article published by National Mortgage News on September 18, 2009, written by Paul Muolo, co-author of Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis, "The country has seen a 'drastic increase' in mortgage fraud cases as a result of the upheaval in the housing market, according to FBI director Robert Mueller. FBI agents are investigating 2,600 mortgage fraud cases as of July 31, up from 1,600 for all of 2008."

Furthermore, the Mortgage Asset Research Institute (MARI) lists elderly and immigrant identity fraud -- the predatory practice of stealing the identities of elderly and non English-speaking individuals for use in straw-buying or other property transactions -- as one of the three emerging fraud schemes expected to rise throughout 2009, and a Reuter's article citing the FBI Mortgage Fraud report states that higher lending standards have increased the value of identities of individuals with good credit to those who perpetrate fraud.

"Lenders need to remain diligent in their efforts to combat fraud," says Meadows. "With buy-backs costing companies hundreds of thousands of dollars per incident, even adding a few extra dollars per applicant still brings about a strong return on investment."

About Rapid Reporting

Founded in 1998 and headquartered in Fort Worth, Texas, Rapid Reporting Verification Company is a national provider of definitive income, identity and employment verification services for mortgage lenders to help combat fraud. In 2007, the company won the 2007 Fix-It Award for a technology solution that solves an industry problem. Core offerings include IncomeChek, which is used to verify income through information obtained from the Internal Revenue Service (IRS), DirectChek, which meets USA Patriot Act compliance and verifies identity via a direct comparison of the SSN to the Social Security Administration (SSA) database and searches of over 15 billion records in public and private databases for identity fraud and abuse, and EmploymentChek, the company's newest offering that combines live, person-to-person telephone contact and comprehensive database research to verify borrower employment. All services operate over a secure Web-based portal, which is audited daily for security purposes, and both IncomeChek and DirectChek are available through RapidChek, a web services platform that allows companies to access both solutions through a single interface. Rapid Reporting formed and continues to build relationships with government agencies, such as the IRS and the Social Security Administration (SSA), to gather electronic data for verification purposes. Rapid Reporting's executive team led the successful lobbying efforts to secure the continuation of the enumeration verification system (EVS) with the SSA database. For additional information, email Info@RapidReporting.com, call 888.749.4411 or visit www.RapidReporting.com .

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