Speaking at The Mortgage Administrator Online Event, Diane Mitchell, credit director at Fleet Mortgages said that “this year seems to have really heightened mortgage fraud”.
She said that the company was seeing more examples of false or staged income, altered or fabricated pay slips, alternative or fake bank statements, or mortgage property or people not disclosing adverse credit.
Mitchell continued: “We used to maybe get one false document every sort of like couple of months, but so far this month with we’ve received three.”
She noted that one contained altered pay slips, one was for an SA302 and another had false bank statements.
“Every lender that we’re speaking to has seen a real increase in the number of false documents and mortgage fraud that we’re getting at the moment,” she added.
Mitchell said that cases of mortgage fraud tended to rise when the market was tough, and due to high case volumes applicants who would undergo mortgage fraud may think “they [lenders] will miss it, and it will just go through”
“A lot of them don’t realise that if they apply to a lender for a loan and it gets declined, if they then submit another case to another lender, they can actually see from the fraud systems that that applicant has been declined for a mortgage and they will start asking more questions.
“So, the technology lenders have nowadays to see what’s gone on with that customer or broker is amazing, but in this climate they are trying more ways to get through,” she added.
Brokers should trust ‘gut feeling’
Mitchell urged brokers to trust their “gut feeling” if something didn’t add up as there were typically other “tell tale signs” in the application of mortgage fraud.
“As soon as you think that something doesn’t add up then check everything, because normally identifying the false pay slips or documents normally comes after there’s something else that doesn’t seem to sit right,” Mitchell said.
Mitchell said that when she does a review of brokers she would look at whether there are a lot of applications where the accountant is the same or the pay slips are all in the same style or are they all working for the same company, especially if there are cases from another introducer.
“If it’s a fraud ring, you’ll find that they all work as accountants, or they all work as chefs. They tend to have it all the same and you’ll be able to profile and say I’ve got an awful lot of applications in where they are all chefs and they’re all earning over £50,000,” she explained.
Mitchell said that she told underwriters if they had “suspicions” to google the name, as that could turn up a lot of information. She pointed to an example where a woman who had submitted an application and had previously committed HMRC tax fraud and received a two years suspended sentence.
On pay slips, she said some giveaways would be minimal or no PAYE tax paid, time periods not matching on the document, tax codes being incorrect and changes in formatting.
She also noted that grammar, spelling and formatting were key areas to keep an eye out for on HMRC tax forms.
For bank statements, checking that the transactions and opening balances line up is also important.
Mitchell said it was vital that brokers were on top of this as it could have “really serious consequences” such as getting removed from lenders’ panels.
She concluded: “Protect yourself, because unfortunately it is your reputation and your business as well that really suffers when applicants do falsify documents and be careful of a broker submitting cases to you because you don’t know whether they’ve been removed from other lenders panels.”
Mitchell pointed to training to make sure people understand cases and having a good compliance team or admin staff that they could refer cases to.
