TitleVest unveils fraud protection technology for lenders
November 05, 2008
New York-based TitleVest announced the beta launch of its newest proprietary technology, UCCtracker, which is designed to protect lenders against fraud.
UCCtracker tracks the filing of UCC Financing Statements on the New York City Department of Finance’s ACRIS recording database and alerts its users whenever a subsequent UCC is filed that affects the original, tracked UCC.
Uniform Commercial Code (UCC) Financing Statements are security agreements used by lenders
to place a lien on personal property. In New York City, the most common use is in connection
with institutional lending on cooperative apartments. In such cases, the lender records a UCC-1
on ACRIS to evidence its security interest in the borrower’s shares of stock in the cooperative
corporation, which acts as collateral for the loan.
UCC-1 Financing Statements are short, standardized forms, that can be created and filed without
any particular expertise and do not require any authorizing signatures. Likewise, UCC-3s, which
are used to terminate UCC-1s and thereby release the lien, are similarly easy to create and file.
As such, they are prime candidates for fraud, according to TitleVest. Reports indicate that mortgage fraud is on the rise. The Quarterly Fraud Report from Mortgage Asset Research Institute (MARI) revealed a 42 percent increase in mortgage fraud in Q1 2008 versus the prior year. Information from the FBI, HUD-OIG, FinCEN, MARI and Federal National Mortgage Association rank New York among the top 10 areas for mortgage fraud in the country.
"The UCC filing database essentially relies on the honor system. There are no checks and
balances to ensure that the party filing UCCs is authorized to do so." said Bill Baron, president of
TitleVest. "Consequently, a lender’s security interests can be fraudulently or inadvertently
amended, assigned or terminated without its knowledge. UCCtracker protects lenders by sending
an alert whenever a UCC affecting its collateral is recorded."