With Mortgage Fraud a constant threat, we wanted to share some of the trends our Compliance team has seen recently.
Employment Fraud
A common type of employment fraud we have seen in the industry is inflated salaries whilst working for a family business, this is something that lenders look very closely at. This is due to the fact that income amounts can easily be inflated.
And what happens to these inflated incomes once the mortgage completes? As expected, this quickly reduces.
So, what can you do to combat this type of fraud?
KYC – Know Your Customer
KYC is the best way to help combat this type of fraud. KYC is the process of understanding the background of your client and their financial circumstances. Just doing some simple checks can help identify if what they have told you is genuine or not.
Conducting a Companies House searches will help you identify if the client has any connections with the company that they work for. Using this site, you can review all the people involved in the business and if their surnames match, then it is possible that the client is connected to the owners in some way. Also, using Companies House, you can review their financial accounts and review their turnover and size off the company. This is a good way to check if what the client has told you about their employer matches the truth.
Ensure you have collected at least 12 months’ employment history. In many cases of employment fraud, the client will only have been in their new job for a few months. Therefore, find out what they did before their new job or new role. Find out information such as:
- Has their income only recently increased?
- Are they being paid in line with the role and the size or turnover of the company?
- What is the distance between the job and where they live?
- Is their new job in line with what they were doing before?
- Are they connected to the owners in any way?
In each instance, you should ask yourself, does this make sense? Do I need anything further to support this case? If you are in any doubt, you can speak to Compliance before you submit, and they will be happy to help.
Unexplained Lender Declines
Sometimes, you may have completed all your checks, and you see no issues, but the lender still declines the case. When this is due to criteria, they will tell you just that, but sometimes they will decline without further information. This is usually a sign that they are aware of something that you aren’t. This can be intelligence from systems or other lenders that we do not have access to. But when a lender does decline your case, don’t just resubmit with another lender without doing additional due diligence.
Lenders have greater communication with each other than ever before and will tell each other about cases they decline due to fraudulent reasons. This means if you try and resubmit your case with another lender, it is likely to get declined again and your name could then get connected to the client in relation to the lenders concerns.
So, what can you do to combat this? Firstly, you should be asking your client during the fact-finding process if they have tried with any other brokers or had any applications declined? If the answer is yes, then you need to find out as much information about their previous cases as possible. If the declines are not property or criteria related, then they may need to find out what information is being held about them.
If a fraud flag is registered with a lender, it is likely to be held on one of the main fraud databases such as National Hunters, National SIRA or CIFAS. If your client wants to see what information lenders may hold on them, they can apply using the following links:
- https://nhunter.co.uk/
- https://www.cifas.org.uk/
- https://www.synectics-solutions.com/what-we-do/national-sira
If the flag is registered in error, then the client can contact them to try and remove it. Then once you are happy that all extra due diligence has been completed, you can resubmit the case.
If you have a case and you have any questions, or are unsure of what checks you should be doing, as always you can contact the Compliance team who will be happy to help you.
Regards
Alan Baldwin
Director Of Compliance
For any questions or queries, contact the Compliance Team
Call : 01708 676110