HSBC Provide guidance on some increasing areas of fraud

HSBC UK Intermediary business. 2019 vs 2020 snapshot.

2020 was a rather busy year for our teams in relation to mortgage fraud. We saw a 43% increase in prevented fraud volumes, and 53% in fraud values in comparison to 2019.

Obviously application volume increases has also played a part in the rise in fraud, as we saw a 62% year on year application volume increase. Which calls for a big thank you to all your advisors who supported HSBC UK during what can only be described as a tough year for all.

Q4 has seen a considerable increase in prevented fraud volumes in comparison to the rest of the year. The Stamp Duty holiday has certainly driven an increase in application volumes for FTB and homemovers. It is these types of application that tend to lead to more staged income due to clients looking to secure a purchase.

Our top 3 fraud type trends for 2020 are;

–         Income concerns (staged income)

–         Scheme abuse

–         False Documents

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Recent Pay Rises

On further review of 2020 income concern cases, a large percentage have been identified as having concerns more specifically  over recent pay rises or unrealistic income.

In these types of case the more a broker can explain the background to a payrise and any further relevant information such as (but not limited to) employment history, this will allow us to make an informed decision on our underwriting assessment. The more information the broker can obtain at the start of the application process the more likely we can proceed with the application in a timely manner and have no need to ask for further requests of information.

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Companies House Checks.

I have spoken a number of times in the newsletter or at fraud presentations about the benefit of completing a quick Companies House check before submitting an application.

As I go through the 151 prevented cases of ‘staged income’ for Q4 alone the vast majority would have likely not been submitted had a CH check been completed, as this would have flagged up vital information which would have led to more questions being asked of the clients.

Company House checks allow you to see the following information:

  • Clear links to family, such as directors of the business having the same family name as the applicant.
  • Accounts held under ‘filing history’ not showing a level of profit on the business to suggest income stated is sustainable.
  • ‘Filing history’ and ‘people’ tabs will show if there has been a recent change of directors and shareholding which could show your client changing to employed just prior to the application.

As always the first line of defence against mortgage fraud sits with the advisor. Lenders will also complete these checks, but by implementing this into the application process it can highlight a need to gather further information from your client, or in some instances lead to walking away from the business.

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Reminder

Non provision of documents

  • We understand at times that clients may pull out of an application after it has already been submitted to HSBC, or potentially the application was subsequently placed with another lender. To help us close the case down correctly and update our records please can a note be added to advise that the case is not proceeding and why.
  • This is especially important if our underwriters have asked for further documentation/information to support the submission.  If however the client is still proceeding but they simply cannot provide the evidence we need, please advise us of this by adding a note.
  • In all cases documents should be uploaded at time of application, and no later than 30 days after application is submitted. Again this ensures that we can proceed with our assessments as quickly as possible and avoids further delays. After 30 days if full documentation hasn’t be submitted the application will be cancelled. For more information on packaging requirements please see our website; http://www.intermediaries.hsbc.co.uk/packaging-requirements.html
  • When there is no response on a request for further documents it could mean that assumptions are made as to why the customer cannot provide the information requested.  This could have a negative impact on the clients records where there may be a valid reason for non-provision of documents.

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