In its thematic review into lenders fraud systems and controls, the FSA said it was concerned that lenders’ fast track systems for low LTV cases from borrowers with good credit scores allow applications to bypass checks, such as income declarations.
It added: “There is also a risk that brokers will learn different lenders’ internal fast track thresholds and exploit this to submit fraudulent business that escapes internal scrutiny.”
The FSA highlighted one large lender that sampled just 5% of fast track cases. This was done at the point of application, allowing brokers to know instantly whether the case required income verification and withdraw it if necessary.
However, the regulator added: “We did see a number of lenders where income was always verified and affordability was assessed using a comprehensive budget sheet, including average costs for household bills, travel, clothes and food.”
It said: “Lenders who ‘fast track’ mortgage applications should ensure that appropriate anti-mortgage fraud defences are in place.”
