Lloyds Banking Group has warned brokers that the increase in paper work associated with the Mortgage Market Review changes may increase the risk of fraud and they need to remain vigilant.
In the same way that brokers are faced with new administrative burdens the same is also true of conveyancers who in recent times face burdensome compliance obligations and ever changing CML Handbook requirements. All this at a time of increased volume as the UK property market bounces back to pre-recession levels.
Criminals are stealing identities and using false documentation to take out loans using the victim's name and details. Also on the rise are cases of vendor fraud where the fraudsters have successfully sold other people’s homes. Their "modus operandi" is to get access to properties first by renting them and then acquiring fake documents in the real owner’s name and attempting to sell the flat or house.
Only this weekend I was talking to an owner of an estate agency in London who had come across two cases at his branch in the last year of vendor fraud where an absent owners identity was stolen and the property was sold to an innocent buyer.
But it’s not just vendor fraud on the increase. Fraudsters are expected to continue to produce more sophisticated fake documents while brokers and lenders embed changes brought about by the new regulations.
Peter Curran, director of strategic partnerships at Lloyds Banking Group said: "Spotting fraud is an ongoing challenge particularly in the face of increased paperwork."
He said: "Think about the plausibility, validity and authenticity of the documents - simply collecting paper will not help stop fraud."
Lloyds said brokers need to be mindful of the challenges presented by increased volume and must not get swept away by a rise in demand for mortgage finance if they are not able to effectively manage the risks it will bring. Surely the same is true of conveyancing.
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