In an effort to help detect occupancy issues related to mortgage fraud, Agoura Hills, California-based Interthinx, a national provider of risk mitigation and regulatory compliance tools for the financial services industry, has enhanced its flagship FraudGUARD product.

The new variances are designed to help protect mortgage lenders from fraud and improve loan quality. Interthinx said this is made possible by the unique FraudGUARD comparison of the borrower’s current residence to the subject property.

Using a borrower’s current address, FraudGUARD produces a data comparison that identifies renters that buy non owner-occupied properties and borrowers claiming owner occupancy on a subject property of lesser

value than a currently-owned property. Interthinx said both scenarios present a certain level of risk.

The enhancements will also help identify potential risks associated with an increase in value of housing and the potential problems associated with the ability to qualify for the increased value.

These changes come in response to a disturbing trend the company uncovered in its quarterly fraud risk report. In the third quarter of 2009, occupancy fraud showed a slight quarter-over-quarter increase, which alerted the Interthinx product team to further study occupancy fraud, buy and bail schemes, straw buyers, risks associated with delinquency/default, and risks associated with home value.

Connie Wilson, EVP of Interthinx, said the slight increase from the second to third quarter of 2009 suggested that occupancy risk may be poised for a rebound. And she was right. As DSNews.com previously reported, the occupancy fraud risk in the fourth quarter of 2009 rose 16 percent from the third quarter.

“The magnitude of the quarter-on-quarter increase suggests that occupancy fraud risk may become a serious issue as continuing price declines and get-rich-quick schemes lure investors back into the market,” Wilson said. “FraudGUARD is ready to support lenders facing occupancy risk issues.”