Gary Salter is head of corporate accounts at Nationwide Group Intermediary Sales
Mortgage fraud seems to be a hot topic at the moment and a day doesn’t seem to go by without a mortgage broker being sentenced or the FCA levying a fine. But what about the type of mortgage fraud that never seems to make the headlines? According to the National Fraud Authority, third party introductions are the largest source of intermediary mortgage fraud.
Most brokers are aware of the due diligence that should be carried out before accepting business from an introducer, but organised criminals are targeting brokers in different parts of the country on the basis that their lack of local knowledge will hide what they are doing.
But despite all of the warnings, brokers are still being flattered into submitting business they know very little about. As such, brokers need to remind themselves of the adage that if it looks too good to be true, it probably is.
Other frauds on the increase include forged documents. A lender will not usually penalise a broker where they have no way of telling if the document is false. But there are a number of steps a broker can take to minimise the risk.
First - and most importantly - brokers need ask themselves what they know about the customer and why do they want to deal with you.
And then, with a customer’s payslips, search online to see if the company exists. Brokers can use Google maps to check the address and may be able to use this information to see if it is in keeping with the employee’s salary or job role.
Basic errors on payslips and bank statements are common and can easily give the game away. For example, the salary amount may not match the amount given on the bank statement. Or the tax code and national insurance number may fail to match other documentation.
It is important to ask for original documents rather than just accept copies as certifying a photocopy as having seen an original may backfire on you.
Another clue is to examine the quality of the paper as it can often be a giveaway. Payslips and bank statements that look too pristine need to be treated with caution.
Other types of fraud could be failing to declare dependents as this can often make a significant difference to a lender’s affordability calculations. Not declaring child care costs to make the application fit on affordability all amount to fraud, no matter how well intentioned to help a client.
Buy to let ‘scheme abuse’, where a client cannot obtain a residential mortgage based on their circumstances is an area where lenders are becoming ever more vigilant and are taking a zero tolerance approach.
It is essential to have absolute clarity about a client’s intentions, particularly in what appear to be ‘matrimonial’ cases or where clients are relocating to a different part of the country to where they work. Another example would be where a client is buying a larger property than they currently live in to rent out.
In all these cases, brokers with any concerns need to speak to the lender and follow it up in writing to avoid any assumption that they are complicit in any mortgage fraud.
Thankfully the vast majority of mortgage brokers are honest and know their customers, but everyone still needs to be vigilant against unscrupulous introducers and indeed clients.