Prevent wire and title fraud with FundingShield’s fintech solutions

As the mortgage and real estate finance markets continue to digitize, the focus has shifted from origination, lead generation and POS optimization (data aggregation) to focusing on inefficiencies within risk, operations, client retention and closing processes. 

FundingShield is a leading provider of risk management, fraud prevention and regulatory compliance technology solutions protecting the mortgage, real estate finance, title and legal industries during the closing and settlement process.

FundingShield’s award-winning fintech solutions deliver the highest level of control and risk mitigation against wire fraud, settlement risk, title fraud, third-party vendors and cyber fraud while improving the bottom line.

The firm’s proprietary database of title and settlement parties is the largest in the industry with real-time, verified and vetted data and no static databases that are ineffective against cyber-fraud, wire-fraud or title fraud that exist at a transaction level.

“We are a unique and one-of-its-kind company in the country that provides real-time data to prevent wire fraud and manage risk and compliance in the mortgage closing/settlement process,” shared Ike Suri, chairman and CEO of FundingShield.

Suri draws on his 25 years of rich experience in private equity, technology and human capital management arenas to lead FundingShield to enable seamless and secure execution of the closing process and transfer of funds at the end of a mortgage loan transaction.

“The mortgage closing/settlement process is the most painful part of the whole journey; this is where we come in. We create a more secure closing experience for all parties involved in a loan, from the borrower to the investor and all the service providers in-between,” Suri said.

The solutions operate like a trading exchange, where at the time of closing, rapid processing is carried out electronically through the company’s highly-efficient and time-saving algorithms and software solutions, while also ensuring that the right information, documents and funds reach the right person.

That’s not all; FundingShield goes a step further to provide clients with up to $2million to $5 million per transaction coverage to support and protect the transaction.

From a consumer’s perspective, FundingShield has also delivered a product for the B2B2C market, working in close collaboration with lenders to protect consumer down payments and provide lenders with the option to have buyers confirm the destination of their down payment funds prior to closing, thus preventing wire fraud and other issues.

The company is currently collaborating with renowned names in the industry to deliver its B2C product — launched with premiere names in the mortgage and real estate markets — that will cater to the sellers’ needs as fraud has been picking up on those payments from escrow, settlement firms and attorneys.

“Prior to FundingShield, companies had been dealing with closing agent and title vendor data that was static and they had to manually analyze and maintain it, generally once every year or two if they had any process at all,” said Adam Chaudhary, president of FundingShield.

“However, this method has since become obsolete and cost-inefficient in a world where lenders and investors have less control of closing and title agents, data and communication trust is an issue due to hacking, phishing, business email compromise and other types of cyber-fraud are of growing concern.

“Further, many federal and state-level regulators are demanding to see an effective compliance and risk management program in place owing to the local regulations and laws and closing conventions that exist in every state and county that market participants must abide by,” Chaudhary said.

“Our solutions have eliminated the vulnerabilities that the mortgage closing process is exposed to from a compliance, fraud and cyber security perspective, and placed closings through real-time processing to confirm representations and data for the transaction and the counter-parties involved are accurate and carry backing from insurers to de-risk and improve asset quality as well.”

FundingShield’s APIs and LOS integrated services allow lenders, investors, homebuyers and title companies to confirm wired funds are going to intended recipients and transactions are free of impact from cyber and wire fraud, phishing, business email compromise or title fraud.

FundingShield, which is the only MISMO Certified Wire Fraud Prevention tool, was named a HousingWire Tech100 winner for 2019 and is also an IBM API Partner, among other industry initiatives and recognition.

FundingShield has identified and prevented wire and title fraud on over $560 billion in U.S. real estate and mortgage closings where the firm investigated, corrected and protected clients before any losses were incurred. 

FundingShield saves time and money with ROI over 200% by reducing time spent by compliance, vendor management, operations and closing teams while adding additional coverage of $2 million per residential transaction and $5 million per commercial transaction.

What is the risk? A sample of FundingShield’s Proprietary market analytics for the 2019 full year (Transaction means residential or commercial real estate investment or mortgage closing):

26.8 % of transactions were non-compliant

During 2019, approximately 26.8% of all loans were unique residential or commercial transactions that were not compliant with regulations or valid with insurers, due to at least one problem with closing document, licensing, transaction data or title vendor representation / compliance. This is a 34% increase from the last reported date of 20% during the same period the year before.

1 of 3 transactions had multiple issues

Upon further analysis, the number of non-compliant loans that had multiple defects was almost one-third of the 26.8% of loans. 

Increase cost of single loss + related recovery

Costs associated to wire fraud related losses, losses due to defalcations and the costs to inspect and update workflows / systems, recover funds and reinstate insurance policies after external consultants perform system and process analysis can reach up to $850,000.

Recent breaches due to fraud schemes and hacks – increased fines and reputational damage:

Fines from regulatory bodies, eroded shareholder value and customer trust.  Equifax recently paid $700 million and Facebook $5 billion. The Capital One breach has changed how many banks are interfacing with third parties altogether – evidence of how financial institutions are highly exposed to reputational risk.


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