Managing Fraud In Mortgage Market

Managing Fraud in the Mortgage Market

……With the market coming off record highs the industry is in a position to see and address the critical issue of fraud  – the use of deception for the purpose of obtaining a financial benefit – the term covers a wide array of concepts including misrepresentation of financial, employment or identify information, false valuation or intentional default following a cash-out action.
For the mortgage market fraud can include a broad cast of characters to the borrower to the broker originator, valuer, accountant, legal advisor or lender.  In its most pernicious form it appears as a syndicate of  participants colluding to obtain loans by a variety of unlawful means including providing false information…..
An expert in the area of mortgage fraud RISQ Group Pty. Limited (RISQ) has seen first hand the human impact of mortgage fraud on consumers who have become financially distressed or bankrupt as a result of obtaining a loan they are unable to service.  This is in addition to significant losses faced by lenders who have written loans supported by false applications and in some instances false valuations…
Many within the industry may not realise that Lenders Mortgage Insurers are not licensed to cover losses suffered as the result of fraud perpetuated by a lender or a third party acting on its behalf in the origination chain.  As a result the lender may seek to recover losses from those they may consider to be liable…..
Verification of document information is paramount…….it is important to realise that dealing with fraud at the end of the process can be far more costly than at the beginning.  At its simplest verification comes down to taking responsibility for information passed on by the borrower.  This generally means less reliance on supplied application information or documents and using the phone more frequently…