27th November 2008
Fraud warning - before signing on the dotted line...
Over the past few months, as the property market has slowed, the industry is seeing more and more signs of distress, particularly amongst more highly geared investors and developers. Experienced brokers and practitioners will recall the severe impact on the profession in the early 1990s arising from mortgage claims. We are beginning to see a return to those days, and the slowing market does mean that many borrowers are moving into “forced refinancing” and, as times get tougher, the need for brokers and solicitors to be vigilant against fraud rises.
Here are some common themes that the industry has seen in past claims:
- The fraudsters are often known to the broker or practitioner, not just someone off the street. In one case, a practitioner had known the husband and wife clients for many years and agreed, at the wife’s request, to allow her to take the documents home for her invalid husband to sign and then bring them back for the practitioner to witness.
- Time is usually of the essence and the deal or documentation needs to be done straight away. In one example, the client’s Ferrari was double parked and she needed to sign the documents in a hurry. The practitioner was so flustered by the client’s mad rushing that he did not realise that she signed her husband’s name, not her own, or that the documents were in the name of her husband.
- There is a disparity between who is receiving the benefit and who is taking the risk. Be wary if, for example, the proceeds of the mortgage are going to only one of the mortgagors and not into an account or asset in joint names or where a relative of the borrower becomes the mortgagor or guarantor but receives no benefit.
- While the benefit of hindsight is a wonderful thing, in some of the forgery cases there was something wrong with the documents that should have been picked up at the time. For example, the person’s name was spelt incorrectly or the handwriting looked very similar to that of the person getting the benefit or the signature was nothing like the real signature and a simple check would have revealed this.
So when dealing with mortgages and, in particular, witnessing documents -
- Be scrupulous to the point of pedantic.
- Make no exceptions and give no special favours for anyone, no matter how well you know them.
- Take your time, don’t cut corners and don’t be rushed.
- Check to whom the document relates and what has been signed.
- Never, ever purport to witness a document if you have not seen the person sign it in person.
- Always sight the original documents, particularly photo ID - never just accept copies.
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Head of Lending
Iain Pepper is a Vice-President and the Head of Lending for the La Trobe Group.Read full profile here.
La Trobe is one of Australia's leading independent specialist mortgage Financiers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Mortgage Funds under AFSL 222213. It employs over 145 staff and has raised over AUD$10Billion to assist over 100,000 customers since inception in 1952.
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