Growing markets can be seen as an opportunity for fraudsters to exploit. Mortgage fraud is a crime in which the intent is to materially misrepresent or omit information on a mortgage application to obtain a larger loan than would have otherwise been obtained had the lender or borrower known the truth.
As an industry, lenders, brokers and borrowers must all try to be vigilant and robust in the procedures we employ to protect the interests of legitimate mortgage applications.
Due diligence on identification
Make sure that documents submitted to support a customer’s identification such as driving licences, passports, payslips are legitimate. With driver’s licences there are some simple checks that can be carried out on the licence number that will verify the gender and date of birth of an applicant.
Due diligence on bank statements
There’s no doubt that nowadays fraudsters are more sophisticated, and with printers being much better quality it’s sometimes hard to detect what is legitimate and what’s not. However, it’s often the details that give them away. There are a number of checks that can reveal the true nature of documentation such as:
• Spelling errors – whether it’s in the description of a transaction or the name of a company that had a payment made to it
• Matching credits – do the credit amounts on the statement match up to the ones on the payslips and P60s and are they being received from the employer you expected?
• Unexpected credits – suspicions can be raised if there are lump sum cash credits or multiple credits from 3rd parties
• Balances – do the start and end balances reflect the correct transactional amounts?
• Customer’s profile – do the balances and transactions on the statements match up with what you would expect from what you know about your customer?
• Recent documents – are the documents the most recent ones you could reasonably expect to see? If not, it’s worth asking the applicant why they cannot supply more recent copies
• Anomalies – look out for examples where the statement balance doesn’t add up and check for discrepancies in dates.
Another route than can be exploited by fraudsters is where a broker accepts business from an introducer. Here are some ways in which you can mitigate the risks of receiving fraudulent applications from introducers.
• Visit their premises to make sure that they have an office where they say they do
• Establish how long they have been in business – if it’s not long it could raise your suspicions
• Ask around the local business community about their reputation
• Make sure you get verification of the legitimacy of their business
• Use your instinct to sniff out anything that appears suspicious or unusual
• Put in place a formal legal agreement to protect yourself
In a busy market environment, where there is so much to do, it can be tempting to take a few short cuts but with fraud being such a potentially serious issue in the buy-to-let sector it really is something that needs to be met with vigilance and proper procedures to safeguard all those involved in legitimate mortgage business.