Lenders urged to stay vigilant for mortgage fraud
According to the Bank of England’s latest Credit Conditions Survey lenders said the availability of credit secured on property had increased significantly in the last three months of 2012, largely as a result of the Funding for Lending Scheme.
“Clearly this is really positive news,” said Laurence Hamilton, marketing & performance director of Equifax. “But it’s important that a desire for market growth does not come at the cost of higher levels of fraud.”
The correlation between increased financial pressure and the incidence of fraud has been well proven and with little sign of a significant overall economic upturn Equifax believes there’s every chance that the incidence of first party fraud could increase in 2013 and beyond.
It’s important, therefore, that lenders take all appropriate steps to reduce this threat.
“The Mortgage Market Review put the spotlight on the importance of verifying income data for responsible lending,” continued Hamilton. “Income verification is also absolutely crucial to reduce the risk of fraud and bad debt risk.
“An individual’s income is, undoubtedly, a key component in understanding their ability to manage both existing and new credit for which they apply. Yet it is also one of the most likely pieces of information that will be inaccurate on an application.
“Our own analysis of declared incomes on new credit applications identified that approximately 40% had overstated their income by £2,000 or more.
“The majority of providers in the mortgage market already follow best practice in collecting and reviewing income data. But they may not be taking all the steps necessary to verify the information they are receiving.”