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Tight deadlines mean fraud signs are being missed

The ability of lenders’ underwriting teams to identify fraudulent mortgage applications is being undermined by excessively tight deadlines, the Financial Services Authority claims.

In its Mortgage Fraud Thematic Review it says it is concerned underwriting staff at some lenders are stretched and a rise in lending volumes could aggravate weaknesses.

Edna Young, strategy specialist for financial crime and intelligence at the FSA, says: “We found some staff were required to meet tight processing targets and some were unable to identify common warning signs of fraudulent applications such as round figure salaries.”

She also raised concerns about the suitability of underwriting staff, pointing out that many lenders employed high numbers of inexperienced underwriters, while others used sales staff to gather evidence of applicants’ income.

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