As Mortgage Strategy exclusively revealed last month, Philip Robinson, director of the financial crime and intelligence division at the Financial Services Authority, says the FSA has uncovered significant fraud in the new-build sector over the past two years.
Platform, GE Money Home Lending and Mortgage Express have all changed their approaches to new-build valuations in light of the growing risk of fraud in the sector.
Both MEX and Platform have cut their new-build LTVs to 75%, while GEMHL has reduced its ratio from 100% to 90%.
MEX has also changed its new-build remortgage criteria, limiting LTVs to 85%. The lender hopes this will make valuations more reliable.
MEX has also increased the resourc-es it dedicates to detecting fraud in the sector.
Gus Park, head of intermediary lending at MEX, says: “The level of concern over fraud has risen and our commitment of resources has changed accordingly.
“We’ve always been diligent about risk management but are focussing more resources on due diligence, technology, investigation and strengthening our checks and balances across the board.”
Similarly, Ian Graham, head of regulatory and business risk at Platform, says the lender has placed more emphasis on enhancing fraud detection and prevention controls and has devoted funds to anti-fraud training.
Meanwhile, Gerry Bell, head of mortgage marketing at GEMHL, says it has consistently managed the risks presented by new-build properties.
In the past two years it has asked for new-build property valuations to tally with similar second hand properties in the same areas.
Matthew Wyles, group executive director of non-retail business at Nationwide, says: “New-build is a car crash we saw coming. Abuse in the sector was well established in 2005 but I suppose these policy changes are better late than never.”