FRAUD

There are specific types of fraud that are more common to the mortgage industry.

What is fraud?

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.

Common types of fraud affecting the mortgage industry

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

Valuation fraud

Be warned: even though a valuation looks valid, it may be completely fictitious. A computer and a scanner are all the tools a fraudster needs to manufacture false valuations.

• 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.

Identity Fraud

Identity Fraud is a major 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.

Some red flags for identity fraud are:

• Yahoo or Hotmail email addresses

• No landline phone number

• Minimal credit history with Baycorp (Fictitious identities)

• Employment history or residential address history different on application to Baycorp report. (Identity takeover)

• Date of Birth differs to Baycorp (identity takeover)

• Mortgaging a previously unencumbered property. (Identity takeover)

Employment Fraud

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.

Document Fraud

Some common signs to look 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 of the employer.