As technology improves, unfortunately so do the fraudsters.
It is easier than ever before to fake documents, with an increasing number of websites that allow you to produce payslips, P60s or even amend and edit bank statements.
In these situations, it can be very difficult for an adviser to spot the difference between a real or a fake payslip and the application can be submitted with the adviser being none the wiser, but end up being flagged by the lender’s fraud team.
The biggest type of fraud in this area is around staged income.
This is where applicants with low or no income may create income streams for the purpose of obtaining a mortgage.
The income is manufactured to look like regular payments throughout the mortgage application process but it then ceases after completion.
As an industry, we are working together to combat all types of fraudulent activity, but everyone can play their own part in helping to thwart the fraudsters, so here are a few potential red flags on the income-related front:
- Applicant is only employed for a short time prior to the mortgage application – typically six months or less;
- Salary credits paid by “Faster Payment” as opposed to BACS;
- Change in job type that appears out-of-line with previous roles;
- A very recent second job, whereby the income is needed to support the mortgage amount;
- Bank statements that show a sudden or significant increase in income prior to the mortgage application;
- Employer is small, difficult to trace or a family member.
Of course there will be genuine customers who fall into these categories but there are a few quick extra checks advisers can do themselves if they have concerns.
Google the company – does it actually exist and does the street view reflect what you would expect to see? Run a Companies House check – has the business been trading as long as the client has been working there?
Are there any benefit payments on the bank statements that you would not expect to see at a certain level of earnings? Or similarly, student loan credits for an employed person.
Go back to basics – does the year-to-date figure on March’s payslip match the P60? Are the salary credits coming in on working days, not Sundays or Bank Holidays? Are there the relevant deductions you would expect to see on a wage slip for a high earner?
There is no exact science to this and most of the time your customer will be genuine.
However, if something does not feel right it’s worth advisers making these extra checks to protect themselves and their business.