Mortgage fraud on the rise

According to Veda, credit application fraud is now at its highest level since 2009 with a 27 per cent increase in total credit application fraud last year.

Veda’s general manager of fraud & identity solutions Imelda Newton said there has been a trend among brokers to act in collusion with others to defraud lenders.

“What we see through some of the third-party channels tends to be more organised crime with collusion between parties,” Ms Newton told Mortgage Business.

“That is what the data is suggesting,” she said.

Among the four segments of credit application fraud – false personal details, fabrication of identity, identity takeover and undisclosed debts – identity takeover grew fastest – increasing 103 per cent from 2012 to 2013.

According to lawyer and fraud specialist Brett Warfield of Warfield & Associates, brokers are usually involved.

“We get individuals contacting us to say that they have been the subject of mortgage fraud and they talk through what the issues are,” Mr Warfield said.

“It usually comes back to the broker, who has been involved in falsifying the documentation that has been provided to the lender without the client’s knowledge,” he said.

Therefore the clients are the ones suffering the consequences of having their home sold to pay for the loan,” he said. “That has been our experience.”

ASIC has banned at least nine mortgage brokers for fraud since December last year.

Melbourne-based Ms Shilpa Karandikar was the latest broker to be banned on July 23 after an ASIC investigation found she submitted false documents to secure a home loan worth $243,000.

The loan application contained false payslips, false employment documents and false bank statements.

FBAA chief executive Peter White said brokers must maintain good habits such as note keeping and verification procedures to ensure all documents are legitimate.

“At the end of the day you are legally responsible, and if you get caught you are at the risk of potentially going to jail,” Mr White said.

“That’s the bottom line,” he said.