CC White Paper

WHITE PREPARED BY WITH THE HELP OF THE PRODUCT PAPER TODD HOUGAARD AND MARKETING TEAMS S A F E D A T A TRANSFER IN THE MORTGAGE LENDING INDUSTRY THE BIGGEST SHELL GAME COLLABORATION CENTER PAGE 1 EXECUTIVE SUMMARY One of the biggest investments for the US consumer is the purchase of a home, primarily funded through a purchase loan, whereby borrowers are providing all of their most critical personal information to lenders. The mortgage industry processes trillions of dollars in financial transactions and handles massive amounts of borrower’s personal information every year. No banking product offers more information to In fact, cyber bad guys can even work the lender about the consumer than backwards through an email recipient the mortgage loan. list to hack anyone in the transaction -- even businesses with a ‘private network’ In one single transaction, critical – so there is much more at stake than personal data is floating back and borrower identity theft. This is equally forth between individuals and about your businesses security, financial service providers for the loan. And viability and reputation. while these businesses may have their own secure and private Everyone involved in the mortgage loan network, HOW the information is transaction is at risk when they being transferred between all those communicate in any way outside of an entities involved in the transaction enclosed, private ecosystem. is the core problem. With so few lenders and title companies Email, the tool that is most relied truly understanding that the success or upon for messaging and document failure of their business is resting on transfer between these entities, is their ability to deliver an where there lies a broken link in the uncompromised loan transaction, there process. Email isn’t secure… at all. is a unique opportunity to position your brand promise around an unparalleled safe and easy transaction. It’s through the transfer of data via TODD HOUGAARD email that cyber crime Product Management Manager lives and thrives. Mortgage Cadence COLLABORATION CENTER PAGE 2 3 CHANGING MARKET FORCES There are three changing market forces that are driving the need for a solution now. #1 SOCIAL FORCES With the devastating 2017 Equifax data breach, where 143 million American’s sensitive personal data was compromised, consumer confidence is low that organizations are being good stewards of their private data. Consumers expect that an organization puts their safety first in every transaction. They expect insurance, products for both lender and that their data will be managed with the consumer, quality assurance and utmost integrity. What they will soon closing, to name just a few. Meanwhile, learn is the dirty little secret -- that the other outside parties, including the real mortgage lending industry are laggards in estate sales professional, attorneys and data security. the borrower are contributing to the process with documents and messages. #2 ECONOMIC FORCES Data breaches and privacy laws prompted For each transaction, either all parties new regulations like the Gramm-Leach- succeed together (and are safe), or all Bliley Act and new regulatory agencies parties fail together (and lose data, lose like the Consumer Financial Protection money, sully their reputation, lose Bureau. These government “solutions” market share or incur fines). seek to hold financial services companies responsible when they expose their customers to identity theft and other potential cyber crimes. Your organization is responsible for protecting the consumer. Your success or failure is resting on your ability to manage this Borrowers expect that risk. their sensitive personal data will be managed The lending process is built upon a framework of partnerships with third- with the utmost integrity. party providers of data, products and services. These parties provide information for underwriting, COLLABORATION CENTER PAGE 3 #3 TECHNOLOGY FORCES exposing customer information to data Wire Fraud: In 2016, a 480% increase in thieves, cyber-fraudsters and other complaints filed by title companies about online attacks has been made business email compromise scams that impossible with the use of a common target all participants in RE transactions piece of technology – email. As long as – including buyers, sellers, agents & the mortgage industry depends upon lawyers. email for communication related to a mortgage transaction, cybersecurity will AN ILLUSTRATION continue to be a challenge. Imagine each of the parties in the lending process are on their own private and Instead, we propose that the entire secure island, seemingly safe from cyber mortgage industry must adopt a new crime, with a nice privacy network paradigm for working together, protecting the perimeter. While the communicating, and managing the information at rest on each island may be overall real estate purchase process. protected, it’s when data and messages flow between these islands (like notes in a bottle) the data gets picked up by pirates. They are eager to take even the smallest amount of information and parlay it into monetary gain on the dark As long as the mortgage web. industry depends upon email for communication, It is true that every service provider in a mortgage transaction has a responsibility cybersecurity will continue to to protect both the client’s personal be a challenge. information and the security of the entire transaction, but finding a way to reduce the risk of COLLABORATION CENTER PAGE 4 ● Pretexting: Asking a person for The Unintended information under the guise of a person who would likely request that Consequences of information, tricking the consumer into giving up information that would Email otherwise be private. ● When the first email system to include an Phishing: An email designed to look inbox was developed at MIT in 1965 it like it came from a company the was true innovation. (1) People had been consumer would normally be working sticking notes in other people’s with that then requests information directories on a shared network for years from the borrower that would not before this, but something about having a normally be disclosed. mailbox where all your messages would land had perfection written all over it. And it’s not just the consumer being The idea caught fire and today, email is duped. Often, it’s employees working the most prolific tool in use on the within the industry that fall prey to Internet. fraudsters using email. The Financial Crimes Enforcement Network cited the Who could have predicted that one day FBI in a targeted advisory notice that nefarious parties would create pointed to email compromise fraud technologies that could scan or divert schemes targeting financial institutions’ information packets traveling through the commercial customers in over 22,000 network that read email in transit reported cases since 2013 at a cost of between parties. It’s not just that emails $3.1 billion. (3) are, by default, transmitted over the public Internet in plain text, emails can In total, the FBI says email-related be intercepted, spoofed and compromised. financial crimes have cost U.S. financial The three most common email attacks are: institutions well over $5 billion over (2) the last four years. The past two years saw a 2,370-percent increase in losses ● Baiting: When an email promises one thing but delivers another, often a malicious software program that is then secretly downloaded onto the system, compromising it from the inside. As long as the mortgage industry depends upon email for communication, cybersecurity will continue to be a challenge. 1-(2017). Nethistory.info. 2- Elamawy, S. (2017). The 3 Main Types of Email Security Threats. Cwps.com. 3- The Growing Convergence of Cyber-Related Crime and Suspicious Activity Reporting. (2017). LawJournalNewsletters.com. COLLABORATION CENTER PAGE 5 from phishing attacks. The FBI reported altogether and switch to a solution that real estate-related wire fraud with total transaction security attacks increased last year by 480 integral to its design and function. percent. Email hacks account for more The only solution to the most serious than three-fourths of all social-based information security problem in the attacks. And our industry is situated mortgage industry today is to simply right in the fraudster’s crosshairs. stop using email. Part of the reason email fraud has been on the increase is the recent improvements in information security infrastructure that have made system- Taking a Page From to-system hacking much more difficult for them. In short, it’s our ability to Other Industry make companies look like fortresses that have driven criminals to exploit Playbooks this weakest link in online communication. Connecting groups of people and organizations into one secure network is The resurgent focus on email as a not new territory. Many companies primary attack vector has spawned recognized long ago this need to create an entire new categories of crime—such as enclosed environment that protects their the Business Email Compromise (BEC) customers and members. Companies like and the Email Account Compromise PayPal, Amex, Google Accounts, Facebook, (EAC)—leading to enormous increases in VISA, WhatsApp, ACH Payment and Uber wire fraud within the financial services have built their businesses on the promise sector. that users are protected when they do business with them. As the incidence of fraud continues to grow, many companies are redoubling The only way for these companies to their efforts to lock down email and uphold that brand promise is to bring their retrain users. In spite of the numerous users into their enclosed, encrypted, bolted-on security measures companies private and secure island. deploy to make email incrementally safer, they will never be enough. Every These companies have successfully changed new fix is inevitably followed by a how online users are connecting to one creative new way to defeat it. anotherstuff in an environment with a secure perimeter around it.

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