Beginning on July 1, 2017 the nation’s 3 largest credit bureaus will implement a reporting change that will significantly reduce the amount of tax-lien and civil-judgement information reported within consumer credit reports. This change, which was implemented under the National Consumer Assistance Plan (NCAP), will result in the elimination of the above reported items if consumers do not meet the following requirements:
- Inclusion of the minimum requirements to correctly identify the consumer – lien must include name, address and either the full social security number or the full date of birth
- Frequency of courthouse visits to obtain newly filed and updated public records – must be performed within 90 days in order to qualify for bureau reporting
These changes are being implemented in the name of consumer protection – ensuring accurate, current data is being conveyed on credit reports. However, many liens and judgments do not include SSNs (often redacted for security reasons), leaving credit reports less reliable, requiring lenders to lean more heavily on additional products to identify and/or protect from these types of lien risks. For instance, lenders who utilize a Legal & Vesting report to confirm vesting and rely upon credit reports to identify all outstanding lien risks will now potentially be left with an incomplete picture of the subject properties lien obligations.
As a lender or servicer, how can you limit your risk from these changes?
Origination lenders who currently rely on credit to identify lien risk can protect themselves by switching to either a current owner title search product like Property Reports or a product such as Accurate’s EquityNow™ program which provides protection components for unidentified liens should the omission of these items result in a loss. Property Reports accurately capture these outstanding lien risks through the manual search of public records including the Register of Deeds and/or Civil Judgement databases.
Origination applications won’t be the only component potentially affected by these changes. Lenders and servicers who use a credit reporting cycle to monitor their portfolio’s performance and to assist loss mitigation teams in minimizing delinquencies and default will need a new “back-end” portfolio monitoring product. Accurate EquityRenew™ combines technology, processes and data analysis to quickly and thoroughly evaluate and identify red flags related to liens and is compliant with OCC guidelines.
Additionally, if lenders heavily rely upon credit reports to support their clearance efforts, these bureau reporting changes may complicate the underwriting clearance process. Outsourcing a portion of lien clearance can reduce the burden on your staff. Accurate EquityClear™ leverages automated title and lien clearance for greater efficiency and less risk.
Along with the need to modify products to obtain reliable information, lenders can also expect to see an uptick in credit scores, potentially requiring alterations to their risk matrix and underwriting credit score criteria, requiring costly internal process adjustments.
Need help assessing your risk and containing costs related to these changes? Contact Accurate Group today, so you’ll be ready when these changes take effect on July 1, 2017.
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