There is no doubt that mortgage fraud is an ever present problem, one that both lenders and advisers struggle to identify and prevent. As the fraudsters become more inventive we too need to be more creative when it comes to stopping fraud.
Sometimes the fraud originates with an individual, other times an introducer is party to it too.
This year fraud prevention has been a higher priority than ever at Pink. The success of our network members’ businesses is paramount, so ensuring they are not affected by the taint, or the financial impact, of handling a fraudulent application is in everyone’s interest.
Pink has run a series of fraud and quality roadshows to increase awareness of the types of fraudulent applications being made and the ways in which fraud can be prevented.
During seminars, which formed part of our ongoing training and development programme, lenders and providers gave our advisers an insight into the systems being put in place and the signs to look out for.
The roadshows turned out to be two-way information exchange. We gave our members the tools to identify and deal with potential fraud, they in turn imparted their own experiences, it highlighted some of the different ways that frauds are being attempted.
There are many different types of mortgage fraud, take this case as an example:
In one case the Pink adviser took a referral from an introducer for a client requiring finance ‘in a hurry’. As part of the adviser’s standard procedures he undertook a land registry search which showed the property was owned by someone else.
This triggered alarm bells so he conducted further searches and discovered the client was wanted by Interpol for drugs related activities. The adviser flagged up the case with the network, made the appropriate disclosures and avoided a possible loss for a lender.
In another case an adviser, who had just attended a fraud roadshow, had concerns after a lender declined his client’s initial application. The applicant claimed they were paid in cash but could not provide evidence of payments into a bank account.
The adviser looked deeper and made further enquiries, including calling the applicant at work to verify their employment, but was still unable to confirm the applicant worked at the company they claimed to.
The adviser brought their suspicions to us and after disclosures were made the local police contacted us to assist with their enquiries.
Finally, when one client attempted to manipulate a lender it was communication between departments at one of our member firms that beat the fraudster.
The client in this case told the adviser the property to be purchased was a buy-to-let investment.
However later in the process the insurance division advised that they had issued a residential home insurance quote on the buy-to-let, and a buy-to-let quotation on the property the clients were currently living in! This was clearly an attempt to bypass lender income checks.
The above example highlights the importance of communication, if the insurance division hadn’t brought the insurance quote anomaly to the attention of the adviser, the client may well have had their application approved.
This is just a snap-shot of the types of fraud being attempted, there are many more and as times get tougher the number is not likely to diminish. While we educate advisers to look for fraud, our advice is: be vigilant and thorough, train your staff and keep up to date with new developments.
