SPECIAL FEATURE: It pays to check about fraud

Robyn Hall

November 18, 2014

And lots of those links give some eye-watering examples of the fraud that can be perpetrated around the purchase/refinance of a property. Let’s just say that those seeking to obtain monies through mortgage fraud have, over the years, exercised many ‘ingenious’, and some not so ingenious, ways in order to get their hands on the cash.

One such recent example comes courtesy of a headline from The Telegraph which reads, ‘Virgin pilot jailed for £30 million mortgage fraud’.

My first question was going to be, ‘How do they know?’ but then I realised the man in question, Mark Entwistle, actually worked for Virgin rather than being a v…well you catch my drift.

Despite the mischievous nature of the sub-editors involved in that headline, the underlying story is less funny. Entwistle was recently jailed for 14 years – yes, you read that correctly – for his part in a major fraud which used corrupt solicitors and accountants in order to push through bogus mortgage applications. It would appear that Entwistle wasn’t backward in coming forward either when it came to spending his ill-gotten gains. Most of it appears to have been placed on the betting tables of various Las Vegas casinos while another large sum ended up buying a luxury boat. So much for not drawing attention to yourself.

No doubt, the lender community reading this will have hundreds/thousands of other examples where fraudsters either successfully or (hopefully) unsuccessfully committed fraud and, there’s no doubting the fact that, as long as we have a mortgage market there will always be those seeking to exploit it. Indeed, having talked to many lenders about this no sooner have they shut one fraudulent door than those involved seek to open another one.

This is why it is so absolutely vital that everyone involved in a mortgage transaction is fully up to speed with the methods fraudsters use and that, at every point in the process, stakeholders have all the requisite checks in place to stop the fraud before it gets through. Mortgage advisers are absolutely no different to solicitors, accountants, lenders, etc, in this regard and indeed it will be absolutely worth your livelihood to make sure that potential fraudulent activity is flagged up with the authorities before you become an accessory.

We will all no doubt have read about lenders taking brokers off their panels due to a variety of reasons and, we can be certain, that one of those reasons will be potential mortgage fraud from a case.

Even if advisers are completely innocent the likelihood is this will result in a damaged relationship even if the truth eventually comes out. It therefore pays to ensure you are doing all you can when it comes to issues such as client identity checks, affordability ‘sense checking’ – for example, does the client’s incoming income tally with their job/pay scale? – and some due diligence around other ‘professionals’ working on the case.

This often comes as a surprise to some people but there are a small minority of people in the ‘professions’ who are not as honest as the day, I’m afraid to say. With many examples of mortgage fraud you will often detect the hand of a rogue solicitor or accountant, or both. Greed can be an overwhelming force for some people and it is therefore imperative that the broker is absolutely sure about the identity of those professionals involved, their credentials and whether there is the whiff of ulterior motives within a case.

My advice is to carry out ‘common sense’ checks on all of the above. If there appears to be something dodgy about the case at any stage, then the broker would be well-advised to pull up the drawbridge and send for reinforcements. Make sure you cover your back and tell the authorities what is going on as soon as you suspect it – this is not ‘whistling like a canary’ in any way, shape or form, but it is protecting your business and reputation. If it turns out there is nothing amiss then at worst, you may lose the client, at best, you get to keep doing what you do and you can feel pleased that the latest attempt by criminals to defraud the mortgage market has not been successful because of your good work.

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