NFA unveils mortgage fraud forum
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The National Fraud Authority and the Metropolitan Police have brought together all the key partners in the mortgage community to establish the Mortgage Fraud Forum.
The aims of the forum is to make it much harder for criminals to commit mortgage fraud, as well as to tackle top mortgage fraudsters and increase awareness of mortgage fraud and the damage it causes.
The NFA estimates that the annual value of mortgage fraud is £1bn, and without continued cooperation, that figure could increase.
“Working Together to Stop Mortgage Fraud”, is the NFA’s second update report on the progress the mortgage community is making to address the threat this crime poses to the UK.
Its report says the FSA has recognised this risk and has expressed an intention to re-focus its attention away from brokers and onto the lenders.
It has also published a set of proposed changes to the way it regulates the mortgage market which incorporate a number of measures that would, if implemented, impact on mortgage fraud.
The NFA mortgage fraud report notes that significant progress has been made by public and private organisations involved in combating mortgage fraud in the past twelve months, but urges stronger joint efforts by both sectors to more effectively respond to new fraud threats.
The report also highlights key issues and shows how the mortgage community is responding.
One of the key issues highlighted in the report is the difficulty lenders and intermediaries sometimes have in identifying fake and falsified documents within the mortgage application process.
HM Revenue and Customs ran a pilot scheme to assist lenders and this helped to prevent attempted commercial frauds with an estimated total value of over £111m.
its report says the mortgage community is fighting fraud more effectively by targeting corrupt mortgage intermediaries, solicitors, licensed conveyancers and surveyors engaged in fraudulent activity.
Investigations by the Solicitors Regulatory Authority into solicitor involvement in mortgage and other property fraud have saved lenders between £15-20m.
The City of London Police, which is the National Lead Force for fraud, is currently working on 15 investigations into organised mortgage fraud worth millions of pounds, up from four in 2008, with a number of arrests in several cases.
NFA CEO Bernard Herdan says: “In the economic downturn, there has been a reduction in the availability of products that were targets of fraud such as sub-prime, buy-to-let and self-certified mortgages. The economic climate also has increased pressure on lenders to reduce costs, so there has been a greater emphasis on fraud prevention, detection and recovery of losses. The NFA urges mortgage lenders to maintain this robust approach in the anticipated economic upswing.”
Readers' comments (4)
Paul Tolliday | 16 Mar 2010 11:00 am
A fraudster has access to very easy methods of obtaining false payslips, P60's, passports, and driving licences which are unrecognisable from the real thing. With the use of the internet these items can be easily obtained. I am unsure as to how fraud using these items can be detected apart from the lender insisting on seeing originals of all items and at present they rely on the lowly adviser to certify items requested or don't bother to even request these items. I would suggest that it is down to the lenders to insist on obtaining original items in all instances but I can see that there would be serious resistance to doing this.
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Grey Haired underwriter | 16 Mar 2010 4:10 pm
Paul is absolutely right with his comments regarding documentation and these things are even harder when so many people only provide internet bank statements. Unfortunately it seems that the provision of such documents is not illegal although why someone would want novelty P.60's, payslips etc excepting for fraudulent purposes is beyond me.
As an Underwriter I am reliant on the mistakes made on these documents and thankfully it is amazing how often the NI number or the gross figures are incorrect. Thankfully the bulk of fraudsters try to provide some genuine information and this usually contradicts the false docs. No matter what we try, however, we will not stop fraud until perpetrators of even minor fraud are prosecuted and see that there are real penalties for their malfeasance.
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Compliance Man | 18 Mar 2010 4:55 pm
In answer to Paul's comment the reality is that most people couldn't tell you a fake passport or other ID documents from the real thing - even the police will tell you that some of the fakes are so good they can't tell either.
Many lenders use alternative methods of checking ID (on-line verification is actually the recommended JMLSG method).
They ought still to require that the solicitor sees the client and verifies (for what it is worth) the original photographic evidence as a true likeness to help reduce fraud.
The Grey Haired underwriter is also right about the errors that appear on some fake ID. Unfortunately not all firms train their staff in what to look for and the back of the evidence is just as important as the front but often missing on documents submitted by solicitors.
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Anonymous | 16 Aug 2010 4:29 pm
my network has an online verification system in place now and whilst expensive to implement it will ultimately prove useful in stamping out ID fraud. its especially useful with non face to face business. how many brokers for instance still certify as originals faxed copies of passports? quite a few I bet
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