Rapid Reporting Revenue and Competitors

Fort Worth, Texas-based Rapid Reporting is a national provider of pre-funding income and identity verification products for financial institutions to help combat fraud. Jay Meadows, president and CEO, and Ray Petta, COO, founded the privately held verification company in 1998. Sixty-four percent of all mortgage fraud is income- or identity-related. Rapid Reporting began by offering income verification to the mortgage industry. The company demonstrated to the Internal Revenue Service the need to take income verification from a post-funding tool to a pre-funding tool to help decrease the occurrence of fraud during the loan process. The company established a program with the IRS that enables lenders to obtain tax transcripts directly from the nation's tax collection agency. Rapid Reporting became a leader in the process by bringing tax transcripts to the mortgage industry within 24 to 48 hours for verification of income. According to the IRS, Rapid Reporting is the largest income verification vendor to the mortgage industry. In 2001, Rapid Reporting became the first private company to form a relationship with the Social Security Administration for the purpose of initiating a program for the financial industry to authenticate Social Security numbers. This program allows financial institutions to verify that the data provided by an individual either matches or does not match the SSA data. In 2002, the company launched its identity verification product, DirectChek. While other companies identify individuals by means of public repository data, Rapid Reporting identifies individuals by including definitive results obtained directly from the SSA. Public repository or "harvested" data cannot always be relied upon because it only monitors the use of a Social Security number, which can be manipulated, and it does not authenticate the Social Security number. Rapid Reporting goes straight to the source, the SSA, and verifies the issuance of a Social Security number to a particular individual. Q: What trends are your company positioning for the in the next few years? Rapid Reporting is positioning itself for the industry's paradigm shift toward loan quality. With the growing focus on compliance and quality, companies are looking for opportunities to better mitigate risk while not limiting borrower access to loan programs. When the market is strong, production divisions steer the boat, but when things become problematic, quality control takes over. In the next few years, we're going to start seeing a give-and-take relationship between these two areas as companies balance their focus between maximizing production as loan volumes decrease, eliminating the potential of repurchases, and increasing profits. We'll also see products - like those from Rapid Reporting - that can be used as a preventative measure on a more fluid basis. More lenders and investors will require income and identity verification and recognize it as a customary part of the transaction, just like credit and appraisal. That's because well verified quality loans bring financial benefits, like fewer buybacks and less risk of costly compliance violations. In addition, verifying loan-critical data adds value and puts loan originators in good light among lenders and investors. Another trend is the industry's move toward outsourcing the manual underwriting process. The focus in today's world is on creating efficiencies through outsourcing and automation, using automation to enhance internal workflows and leveraging outsourcing to enable underwriters and loan originators to concentrate their time on loan review. The third trend we'll be seeing is tougher penalties on criminals. According to the FBI, robberies accounted for $70 million in cash, checks, and other property stolen from banks last year. The average sentence for those crimes is 24 to 36 years. In comparison, mortgage fraud accounted for several billion dollars taken from lenders, but the average white collar criminal received a sentence of only 18 to 36 months in prison. Mortgage fraud has become a very lucrative crime and the FBI estimates 80 percent of all mortgage fraud cases include collusion with a mortgage industry insider. Criminals are turning from crimes of selling contraband to mortgage fraud, we are seeing more laws enacted with tougher penalties on criminals who commit fraud and greater vigilance to prevent mortgage fraud and eliminate opportunities for employee participation. The bottom line is that whatever the industry trends, Rapid Reporting will continue to provide the services that allow companies to focus their energies on funding quality loans. Rapid Reporting will continue to work with the IRS and Social Security Administration to improve existing programs, while looking to create new programs with other government agencies. We are taking the hassle out of the verification process so that lenders and brokers can focus on loaning money. Q: Where do you see your company in five years? We're gaining a lot of momentum. Over the next five years, we'll keep up with the industry's shift toward income and employment verification by continually evaluating the changes in the market, identifying new needs and developing specific solutions that address those needs. We have a track record of developing innovative solutions on a large scale, such as our groundbreaking offering of data sharing between the leading conduits, government entities and companies in the financial services industry and we're going to continue to push forward to grow our solution base and extend our market reach even further. Identity theft is the fastest-growing crime in the history of the world and our identity verification tool has prevented more than 62,000 loans from being funded by borrowers using false identities, saving lenders more than $2 billion. We will work diligently to maintain our standing as the innovators and change agents between government entities and the mortgage industry. Q: What is the single most important issue facing your company right now? The single most import issue facing our company is the industry's inability to implement effective fraud prevention policies. First, most lenders don't have underwriting guidelines that define income and identity verification policies in place. Therefore, they are very inconsistent in verifying loan critical data, even when they've implemented tools with automated triggers to prevent fraud. Secondly, many lenders don't believe it is really this simple to reduce fraud and improve profits. If lenders would recognize the value of identity and income verification, we could get buy-in from the industry to use these tools as a rule rather than as an exception. Proper usage would produce a drastic reduction in fraud. Q: Why did your company join the Mortgage Bankers Association? We affiliated with the Mortgage Bankers Association because its values reflect those of Rapid Reporting. We both seek to communicate, grow the industry and educate industry professionals. The Mortgage Bankers Association is also a great conduit to the industry and has a valuable voice in Congress and in Washington, D.C. Q: What advantages does your company's MBA membership give you? Through our relationship with the Mortgage Bankers Association, Rapid Reporting gains exposure to other members, networking opportunities and greater opportunity to attend more conferences to spread the company's message.