Fraud

Just like every other industry, the mortgage industry can be affected by fraud.

What is fraud? More/Close

Fraud is:

• A deception deliberately practiced in order to secure unfair or unlawful gain
• A piece of trickery; a trick
• One that defrauds; a cheat
• One who assumes a false pose; an impostor.

Deception and false statement are the most common types of fraud. Some instances where false statements can appear include; a false income statement is presented in a loan application, false income figures on a tax return or false assets and undeclared liabilities.

What are the most common types of fraud affecting the mortgage industry? More/Close

There are a number of types of fraud which affect the mortgage industry including valuation fraud, identity fraud, employment fraud and document fraud.

What is valuation fraud? More/Close

Even though a valuation may look valid, it may be a forgery. A computer and a scanner are all the tools a fraudster needs to manufacture false valuations. Make sure you check a valuation for the following:

• A valuation may be received from a valuation company that is not registered or authorised to perform valuations.
• A real valuation may be altered from the original.
• The value of a property may be intentionally inflated.

What is identity fraud? More/Close

Identity Fraud is a growing global issue that is associated with money laundering, organised crime, people smuggling and terrorism. It may involve the theft of a real person's identity or the creation of a totally false identity.

The immediate implications of lending money to a person that does not exist are obvious, however the more sinister implications of identity fraud may not be as immediately recognisable.

The impact of identity fraud - especially in real estate matters - can be dramatic. On a personal scale, identity fraud can cause a family to lose their house or ruin a person's ability to obtain a loan.

What are some of the red flags for identity fraud? More/Close

• Yahoo, Gmail or Hotmail email addresses
• No landline phone number
• Minimal credit history
• Employment history or residential address history different on application to the credit history
• Date of birth differs to credit history report
• Mortgaging a previously unencumbered property

What is employment fraud? More/Close

A person's employment history and experience, as well as their salary, have bearing in the success of a loan application. The self-employed can be difficult to assess, and ACN's or ABN's must be checked. False self-employment or false external secondary employment can boost income to a level that leads to a loan application being approved. Where documents have been supplied, those documents should be scrutinised for inconsistencies.

What is document fraud? More/Close

This is a common problem and some signs to look out for include:

• Tax documents containing rounded numbers. Does it look right?
• Pay slips. Generic appearance of payslip or expensive payroll system for small company. Does the amount seem reasonable?
• Pay dates falling on a Saturday/Sunday
• Bank statements. Check deposits and withdrawals. Are deposits made from employer? Are living expenses accounted for?
• Spelling error of applicant or employer, grammatical errors, letter signed by a person related to the applicant, letter signed by a person other than the Director/Proprietor/Payroll Officer/Human Resources Manager of the employer

What are some tips for managing fraud? More/Close

• Review your verification and authentication procedures
• Be proactive about verification; pick up the phone and use an independently sourced phone number to verify employment details
• Train and equip credit and other support staff
• Be vigilant with documentation
• Implement a staff fraud reward initiative
• Invest in technology, capturing risk at early stages will decrease the cost to your organisation in the long run
• Make sure you work with legitimate valuers
• Be responsible and vigilant; fraud management is the responsibility of the whole mortgage industry.