Fraud is one of the most serious issues affecting the mortgage industry today. With technology becoming an increasingly important tool in managing loan portfolios, mortgage managers are in turn becoming a growing target for fraudsters.
Many have blamed current privacy laws for contributing to recent instances of fraud. The main problem for mortgage managers, however, lies in incomplete processes and databases as well as the lack of accountability demanded by and within the industry.
Uncovering fraud is just the start of the problem. Attempts to combat fraud in Australia are continually hindered by a lack of resources to pursue and prosecute offenders. According to Mark Brennan, head of wholesale lender Macquarie PUMA, an industry-wide change in attitude and approach is needed to properly tackle fraud, from the bottom up.
“Examples of fraud are occurring more frequently and fraudsters are becoming increasingly sophisticated in their approach. Conspiratorial organised fraud, including ID fraud, can be very tough to spot and it’s up to all mortgage managers and originators to make a noise about it,” says Brennan.
Brennan believes that with increased vigilance, mortgage managers can minimise the threat of fraud to their business.
Here are some tips to help manage – and reduce – the risk:
Know your borrower – don’t rely on the minimum requirements; gather as much information as possible
Only accept deals from trusted and verified sources – background checks for new loan writers and new brokers are essential
Be vocal about the consequences of fraud – the more vigilant your approach the less of a target you’ll be
Report any instances of fraud immediately – failure to act will have serious repercussions for your business
Invest in a system that will help you to detect fraud – speak to other mortgage managers or wholesale lenders for advice
Reward good practice – incentivise consistent high quality business and penalise sloppy approaches
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