Brokers and lenders need to be better equipped to prevent fraud as “deceptive applicants” become savvier, according to a specialist lender.
Pepper’s director of sales and distribution Mario Rehayem said both parties have an obligation to help lessen the number of fraud cases seen throughout the Australian mortgage market.
“We cannot shy away from the fact the potential for fraud exists and is a concern in our industry,” Mr Rehayem said in the Deloitte Australian Mortgage Report 2015, released last month.
“Originators do place a lot of faith in brokers, and rightly so [because] brokers are the face and distributor of lenders' products and services,” he said.
Mr Rehayem said the responsibility should be placed on the lender if there are no discrepancies between what was presented to the broker, compared with what was presented to the lender.
He added that lenders should also be held responsible for issues due to credit policy gaps.
“They have to back their policies and bear the responsibilities associated when assessing a loan submission,” he said.
“It depends on the processes you follow internally, separate to the flexibility you give a broker to go and offer your products.
“Ultimately, both brokers and lenders need to be better equipped to prevent fraud because deceptive applicants today are much savvier than they were five or six years ago,” concluded Mr Rehayem.
Earlier this month, a Victorian lawyer who stole almost $5 million from his clients by creating false mortgage documents was sentenced to eight years in jail.
Alan Munt was sentenced at the Victorian Supreme Court on 9 April and is required to serve five-and-a-half years before being eligible for parole.
Mr Munt was convicted in February of creating false mortgage documents and forging signatures to steal $4,819,061.90 from his clients.
In a seperate case, a Melbourne man last month entered a plea of guilty to one charge of conspiring to defraud financial institutions.
The charge against Mr Mohamed Radhi Maki Ebrahim Ahmed, 28, follows an ASIC investigation into finance broking company, Myra Home Loan Pty Ltd, trading as Myra Financial Services (Myra) (no longer trading), located in Footscray, Victoria.
The charge relates to Mr Ahmed's role at Myra and the use of false documents in support of loan applications valued at approximately $79 million.
Mr Ahmed entered the guilty plea during an appearance at the Melbourne Magistrates' Court on 10 February 2015, following his arrest on 19 December 2014. The proceeding was subject to a suppression order which expired on 6 March 2015.
[Related: Lawyer jailed for false mortgage documents]
James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.
He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.
He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.
James holds a BA (Hons) in English Literature and an MA in Journalism.
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