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In Conversation: Reducing Risk and Improving Efficiency in Warehouse Lending

On this episode of "In Conversation," Anthony Beshara, Managing Director, Head of Warehouse Finance & Custody Solutions, leads a discussion about challenges and opportunities in the industry and the rising risks of fraud. He is joined by Rich Berg, Senior Director, Warehouse Finance & Custody Solutions; Ike Suri, Chairman and CEO, Funding Shield; and Adam Chaudhary, President, Funding Shield. 

With mortgage origination down, market participants are looking to manage profitability by cutting costs and adopting or upgrading technology. "Adaptive SaaS platforms really improve efficiency in terms of being more connected, automated and integrated,” said Berg. “These platforms come wrapped in API capabilities and drive integration. Offloading infrastructure -- procurement, monitoring, scaling, troubleshooting -- takes the burden off of businesses, allowing them to focus on interfacing with the clients and earning revenue.”  

Outsourcing systems also frees companies from having to hire internal expertise to support the platform and manage ever-evolving integrations. But integrations can also allow bad players to exploit system vulnerabilities. 

“The mortgage market has become a hotbed for ransomware attacks and cybersecurity events,” said Suri, whose firm offers loan-level verification used on more than $900 billion in closings, and is integrated with SitusAMC’s ProMerit warehouse lending platform. “The vulnerabilities, endpoints and connectivity to data from parties with which you do business can end up exposing (your operations) in a number of different ways.” 

In fact, nearly half of the transactions in a $65 billion portfolio compromised of residential, commercial and business-purpose loans had issues leading to a risk of wire and title fraud, according to a recent Funding Shield report. On average, problematic loans had 2.22 issues per loan, indicating a lack of appropriate controls by closing agents and lenders. 

The group discusses risk management, cyber hygiene, best practices, training and tools to mitigate risk and prevent fraud. Listen to the podcast above.