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Connexus : Issue 38
50 connexus www.abacus.org.au FEATURE connexus www.abacus.org.au 50 INSURANCE Syndicated, organised fraud is on the increase and mortgages and lenders are regarded as “constant” targets, says QBE LMI chief executive officer Ian Graham. Graham says QBE LMI has identified fraud at the application stage involving total loan amounts of $30 million this year alone. “Fraudsters are always on the lookout for new avenues of funding, particularly when lenders have placed them on their ‘watchlists’, so lenders need to remain vigilant,” says Graham. “There are a number of warning signs that lenders should watch out for such as a lack of agent in the sale process, suspicious looking documents, a gift required to facilitate the transaction and the identification of inter-related parties. “If you think something isn’t right but don’t know how to verify it, contact your LMI provider and check,” says Graham. One approach by the organised crime gangs is to steal the identity of someone who owns their property outright. Then a member of the gang masquerades as the property owner to obtain a mortgage using the property as security. Victims are unaware they have been targeted until they are contacted by a bank chasing loan repayments, according to a QBE LMI fraud briefing document. Increase in multi-lender fraud A number of different lending institutions are being targeted simultaneously as specialised criminal rings gain inside knowledge of lending practices, says QBE LMI. The criminals know how to manipulate the system for their own means and often other intermediaries and businesses are participants including real estate agents, solicitors, valuers, developers, accountants and originators. “Falsified companies, documents, and straw buyers (somebody who purchases property for another person in order to conceal the identity of the real purchaser) are used to take advantage of lending institutions,” according to the QBE LMI document. “These criminals also adapt quickly to improvements in identifying their activity. “A recent investigation by our team identified four separate lenders that were all being targeted by the same fraud ring. The lenders, one bank and three mortgage Organised crime hits lenders Mortgages and lenders are being targeted by criminal gangs. There are a number of early warning signs that should prompt lenders to look more closely at the mortgage application and work in partnership with their lenders’ mortgage insurance provider to prevent fraud. QBE LMI recommends keeping an eye out for: • No agent in the sale process • Gift needed to facilitate the transaction • Suspicious-looking documents • Identification of inter-related parties • Additional parties between the borrower and the insured lender • Suspicious income and age correlations • Early payment default Early warnings