Well timed launch of income verification scheme

James Sherwood-Rogers is Managing Director of both Landmark Legal & Financial and Quest

For a number of years we have been calling for the industry to work closer together to look at new ways to help reduce the opportunity for mortgage related crimes to be committed. With the official launch of the Mortgage Verification Scheme on 1 September following its successful pilot, we are greatly encouraged that a new initiative has been introduced that adds a further layer of intelligence to the risk management process. 

The initiative, which has been developed by the CML, the Building Societies Association and HM Revenue & Customs, now enables mortgage lenders to pay a one-off fee to check any application that they believe requires additional due diligence, following their own internal risk analysis. 

The new HMRC unit will check declared earnings details against information provided in income tax and employment returns to identify any potential discrepancies.  

The timing of this launch couldn’t have come at a better moment: the most recent CIFAS FraudScape Bulletin reported that whilst mortgage fraud remained relatively constant compared to 2010, the nature of the majority of frauds committed were as a result of the applicant providing false proof of income (24%) and closely followed by submitting false employment data (20%).

As pressure mounts on consumers through current market conditions, tightening lending criteria, low loan to values or changes to personal circumstances such as unemployment, we are hopeful that the new verification scheme will go some way to supporting lenders in their bid to capture those attempting to access funds by whatever means possible.