Annual cost of mortgage fraud is £1bn, NFA
Council of Mortgage Lenders launches initiatives to tackle mortgage fraud, working in conjunction with the FSA and lenders.
The National Fraud Authority has estimated the annual cost of mortgage fraud at £1bn, the Council of Mortgage Lenders said in its Annual report 2011.
The CML said it has worked with the Financial Services Authority to help lenders reinforce protection against criminal activity.
According to the CML, there was some encouraging news early in 2012, indicating that lender vigilance against fraud appeared to be yielding results.
CIFAS, the fraud prevention representative body, reported that the number of cases of recorded mortgage fraud declined by 11 per cent in 2011, from 3,542 to 3,153.
The FSA has taken a thematic review of mortgage fraud and acknowledged in its findings the work done by lenders to improve safeguards against crime.
Action taken to tackle fraudulent activity by solicitors had helped the industry reinforce protection against crime perpetrated by other professionals in the mortgage process, the FSA said.
In response, the CML undertook to help the FSA encourage a good level of engagement with its “information from lenders” scheme.
Under this initiative, the regulator can use pooled information about brokers it receives from lenders to take effective action against criminal behaviour.
The CML said: “We will now work with the regulator to help reinforce the importance of lenders continuing to make the best use of management information, and to focus on the right issues, manage relationships with other firms effectively and prioritise training and competence on fraud prevention and detection.”
The CML also said that the launch of a new mortgage verification scheme in September was the culmination of many months of carefully co-ordinated work we under took with HM Revenue & Customs and other stakeholders. The verification scheme had been announced in the Budget of 2010, and was then developed and refined during an extensive pilot project.
Under the scheme, lenders receiving mortgage applications that are not supported by adequate evidence of the declared income, or where fraud is suspected, can submit details via a secure link to HMRC. The tax authorities check the details that have been supplied to the lender against their own income tax and employment returns, helping to expose applications based on bogus claims about earnings or working history.
In October, the CML announced its support for the new Fighting Fraud Together strategy, launched by the NFA.
At the same time, the CML also undertook its own review of the activities it – and individual lenders – under take to combat fraud.
The CML said: “Those initiatives are targeted not only at fraudulent mortgage applications, but at money laundering, identity fraud and a number of other different types of financial crime.