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Leading credit firm warns against mortgage fraud

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  • 09/01/2013
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Credit information firm Equifax has issued a warning about the risk of first party fraud in the mortgage sector.

In the wake of a Bank of England report which found the government’s Funding for Lending Scheme had caused a boom in the availability of credit, the firm said that the industry had to up its game in the fight against fraud.

Laurence Hamilton, marketing and performance director at Equifax, said that increased funding available to borrowers was good news, but that such increases often caused a jump in the level of fraudulent activities.

“Clearly this is really positive news,” he said. “But it’s important that a desire for market growth does not come at the cost of higher levels of fraud.”

Equifax said it believed that first party fraud would increase in 2013 as a result and has warned lenders to take further action to reduce the risk, particularly when considering the income of an applicant.

“An individual’s income is, undoubtedly, a key component in understanding their ability to manage both existing and new credit for which they apply.

“Yet it is also one of the most likely pieces of information that will be inaccurate on an application. Our own analysis of declared incomes on new credit applications identified that approximately 40% had overstated their income by £2,000 or more.

“The majority of providers in the mortgage market already follow best practice in collecting and reviewing income data. But they may not be taking all the steps necessary to verify the information they are receiving.”

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