22 October 2009

Beware Identity and Mortgage Fraud

Individuals can be at risk of losing valuable information relating to their identity, which may be used by a third party to acquire access to their personal finances or create falsified documents.

We are constantly being reminded to be on the lookout for unauthorised Credit Card charges appearing on a statement, notification by a financier that a credit rating has declined, and applications for credit such as loans and mortgages having been denied for unapparent reasons.

As we know, loss of identity can happen in such a variety of ways, so vigilance is needed, from safeguarding Credit Cards to protecting your PC from viruses and hackers.

Whilst La Trobe maintains stringent checks and undertakes due diligence on every application, it is important that lenders and brokers be aware of, and actively participate in an array of measures to assist in fraud prevention. These can include the following:-

Pre-Funding Checks
  1. Verbal verification of employment and income (VOEI) and employer, including independent verification of the employer's phone number. Also, performing the VOEI as close to loan settlement as possible will help prevent fraud from a scam involving temporary phone lines set up specifically to verify the borrower's employment. This should also extend to income verifications.
  2. Carrying out independent credit report checks, especially where a residential mortgage credit report was provided by another party. Credit reports should be reviewed all the way down to the last line. One red flag is multiple enquiries that were recently made indicating a possible consolidation loan that is not yet showing on the bureau.
  3. Ensuring certain loan documentation received are originals and not facsimile or photocopy records which may have been tampered with.
  4. For the self employed, signed Taxation Returns. Requiring this form at the front end will discourage some fraudulent borrowers from completing the transaction.
  5. Proper borrower/guarantor identification, obtaining original photo ID, driver's licence, passports etc.
  6. Verify the seller on the contract is the owner recorded on the preliminary title report. This requires teaching employees how to read title searches. Other title red flags include delinquent property taxes.
  7. Specify in settlement instructions to the lender's solicitors if the source of funds should be verified.
  8. Choose referrers wisely. Deal only with counterparties who are properly vetted by you as to background character and integrity. What is their track record ... do they have substance? Choose parties who have real regard for "reputation risk" - when things go wrong they should worry about losses sustained.
Post-Funding Checks
  1. Having an internal computerised Fraud Report and cross-checking system which regularly reviews all delinquent files for systematic relationships between a particular broker, real estate agent, valuer and staff loan underwriting ... ask more questions.
  2. Checking any files that are immediately put into substantial credit following loan settlement.
Sadly a 'successful' mortgage fraud could prevent an innocent borrower attaining their dream of home ownership, by missing the opportunity in their ideal home as the subsequent investigation and fraud resolution occurs.

We hope that this information is helpful to you in the need to protect your identity and prevent others benefitting from its theft.


Best regards
Iain Pepper




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Iain Pepper
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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