Lenders fall short on mortgage fraud
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by Gill Montia
The Financial Services Authority (FSA) has published a review of mortgage fraud in which it notes a “disappointing” lack of engagement with cross-industry information sharing initiatives on the part of some lenders.
In addition, the regulator found some underwriters appeared to be “stretched” because firms’ service standards demanded that applications were reviewed quickly by junior staff “who appeared to lack the experience and ability to identify mortgage fraud risk”.
Meanwhile, smaller firms moving into niche business (eg buy-to-let or subprime) have been warned that underwriting scrutiny of mortgage applications could suffer, if business volumes increase.
Last week, Southwark Crown Court handed down hefty sentences to two men convicted for their part in a £50 million mortgage fraud.
Saghir Ahmed Afzal and Ian McGarry were sentenced to a combined total of 20 years of imprisonment.
The case came to the attention of West Midlands Police following an anonymous tip-off to the Cheshire Building Society.
Enquiries later revealed that in addition to the Cheshire, Bank of Ireland, Société Générale and the Nationwide Building Society had been defrauded.
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