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MFAA Prosper : Mortgage and Finance Brief 12
24 | Mor tgage & Finance brief crime and punishment Strike Force Apia, which investigates complex and large-scale frauds, has been operating since 2007. Since then, 18 people have been arrested for mortgage fraud, including brokers and people moonlighting as brokers, real estate agents, bank managers, accountants, lawyers and customers. The Force has identified $150 million in potential mortgage fraud and has prevented fraudulent loan applications to the value of $55 million from being processed. The largest single case was for a $5 million property. Anyone convicted of fraud exposes themselves to a potential prison sentence of up to 10 years. Report in any acts or omissions of a dishonest or fraudulent nature”. The major mortgage broking networks also have clear guidelines about what to do if a broker suspects a customer is engaging in fraud. They also give extensive training about how to spot a potential fraudster. Aussie Home Loans’ Head of Risk Management, Rod Clarke, points to the business’s detailed and clear sales process, which ensures brokers understand the customer and the transaction. Clarke is responsible for training Aussie brokers to recognise potential fraud. He says it’s important brokers that are alert to customers who falsify income to obtain a bigger loan. “You need to match information on the application with pay slips and bank account details,” he says. “Fraudsters sometimes doctor their payslips, but find it difficult to change their bank statement. Look out for any anomalies between these documents.” Furthermore, when the consumer provides copies signed by a Justice of the Peace rather than the originals, it’s important to check the online JP database to ensure they are properly registered. “We have zero tolerance for brokers found to be engaging in fraud,” Clarke says. “Anyone found to be operating fraudulently will be sacked and we will report any cases of fraud to the bank and the police.” Tim Donahoo, Compliance and Customer Service Manager with Mortgage Choice, says their internal training stresses how important it is for brokers to be diligent about recognising the potential for mortgage fraud. “Brokers have to be on the lookout for anything that doesn’t look legitimate or doesn’t make sense,” he says. “If something doesn’t smell right, it probably isn’t right.” If an adviser suspects mortgage fraud, they must take all the necessary steps to satisfy themselves the application is genuine. “If you have serious doubts, walk away from the application.” If a broker has already submitted the application before becoming aware of potential mortgage fraud, it’s important to flag the potential for fraud with the lender. “Put the lender on notice – it’s up to them what to do next,” Donahoo advises. Brokers must also be on the lookout for serial fraudsters. “People who attempt fraud will learn from past failures to get a loan approved,” Donahoo advises. “They will often go to another broker with a fresh application addressing the problem that caused the previous broker or lender to refuse the application.” • Be wary of spikes in unusual referrals from a single referral source • Bewaryof applications to buy property in areas that are geographically distant from where a purchaser lives • Try to always sight original documents, and take a copy – with the applicant’s permission • If you view certified copies, check the JP who signed the copy is on the online JP database • Always meet the applicant in person • Match information on the application with pay slips and bank-account details. Fraudsters can doctor their pay slips, and some even change their bank statements. • Don’t play detective. Alert the police to any suspicious behaviour immediately • Make contemporaneous notes that you have sighted the original ID steps to protect yourself against fraudulent applications
Mortgage and Finance Brief 11
Mortgage and Finance Brief 13