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‘Don’t be afraid to ask probing questions’ to prevent mortgage fraud, brokers told

  • 29/09/2020
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‘Don’t be afraid to ask probing questions’ to prevent mortgage fraud, brokers told
The Society of Mortgage Professionals (SMP) has warned brokers to be vigilant for mortgage fraud and not be afraid of grilling clients as the economy becomes more uncertain.


In a guide outlining typical fraud processes, the body urged brokers not to submit any cases to lenders which they were suspicious about and published key ways advisers can stop and prevent fraud.

The SMP guide emphasised that it was vital lenders and intermediaries continued to collaborate to manage the risk of fraud – and advisers should inform their clients of the costs.

“It is also important that borrowers understand the consequences of making false disclosures on a mortgage application,” the SMP said.

“Where fraud is identified, lenders may not only decline the application, they may also provide details of the transaction to national fraud databases to help prevent future fraud attempts.

“This action may impact on a customer’s ability to obtain financial products and services in the future.”

In a section dedicated to first-time buyers, the SMP urged advisers not to be afraid to ask “probing questions” of prospective borrowers and talk to them individually if necessary.

“This may be necessary if you feel one of the applicants may be withholding key elements of their personal circumstances from their partner,” it said.


Recession and economic uncertainty

With greater uncertainty expected in the economy as the effects of the coronavirus pandemic and lockdown restrictions are felt, advisers may need to be more alert to the risk of fraud.

The SMP noted that having “an effective approach to assessing the plausibility of customer circumstances is especially important in times of wider economic uncertainty”.

“Periods of downturn or recession are likely to have a significant effect on income in many different parts of the employment market,” it continued.

“However, this may have more of an impact where applicants rely on income from self-employment.

“Many lenders base their decision to lend on income from recent trading years, but the borrowers’ ability to sustainably afford the mortgage commitment remains paramount.

“On this basis it may be prudent to apply an enhanced level of plausibility when discussing your customers’ income and employment circumstances,” it added.


Tips and tools

The guide also includes tips and tools to help advisers spot suspicious applications.

Society of Mortgage Professionals chairman David Thomas said: “We all have a collective responsibility to combat fraud and financial crime in the sector.

“With continuously new and emerging technologies changing the way we do business in the mortgage profession, the methods of fraud are constantly changing, too.

“As such, mortgage professionals need to keep abreast of these changes to protect the ability of the profession to keep serving society, and enabling people to become homeowners.”

The guide can be downloaded from the SMP website.



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