No one likes admitting they’ve made a blunder and it’s no different for lenders and mortgage fraud. Fraud is wildly under-reported in official statistics – millions of pounds of fraudulent loans are written off as credit losses every month because they slip through the net unidentified. The credit crunch has swept through the UK’s mortgage market and left it barely half of its size just a year on.
Instead of continuing down old roads, lenders should see the changing winds as an opportunity to streamline their lending practices and stamp on fraud. The lending community must work together to identify risks – reassessing mortgage books can throw up patterns of fraud undetectable at origination. Things are only going to get worse as Britain slides further into recession and people turn to crime to keep a roof over their heads. Working out which borrowers, brokers, solicitors and valuers are vulnerable to fraud, not to mention if there’s an insider sitting behind an underwriter’s desk in your office, could save billions for lenders in the future. It is pleasing to see that the FSA is now grasping the nettle and getting really serious on cracking down on fraudsters but this alone will not stop the determined criminals.
