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Connexus : Issue 38
52 connexus www.abacus.org.au connexus www.abacus.org.au 52 FEATURE INSURANCE Who are the targets? Mortgage fraudsters target certain groups to increase their chances of success, according to QBE LMI. They include: • Recent immigrants who may not be familiar with lending practices and the law. • Elderly people who may be looking for extra income in their retirement. The fraudsters may convince them they can make money quickly. Elderly people are also a target for criminals because their homes are often unencumbered and they have more assets. • People with low income and little education are conned by the fraudsters that it’s possible to own their own home. Fraudsters identify these groups through social forums, including church groups and community centres, and some targets are also family and close friends of fraudsters, according to QBE LMI. Targets are also pursued through advertising campaigns, or door-to-door selling, and advertising at shopping malls. The advertisements are usually ‘how to get rich quickly’ or ‘grow your finances’. managers were initially recognised by the team as having significant claims exposure. Complex (but traceable) links had been sourced across the four lenders as straw borrowers were used to create fraudulent loan applications. “As expected, the fraudulent borrowers had the support of a number of intermediaries during the application process. Links were identified through historical company director searches and, with the main players still active in the market, our intelligence had assisted in identifying live fraudulent applications with these and other lenders,” says the briefing document. In a recent case, from QBE LMI’s files, a $593,000 loan was facilitated by a third party (introducer) and secured against a mortgaged property but no repayments were made. The borrower alleged fraud and the lender sought possession. The loan funds had been paid into an account in the employer’s name and the introducer was a signatory to the account. The introducer then used the loan funds for their own use (including holidays, furnishings, cars etc). “The fraud occurred because the borrower provided false employment and income details and a false certificate of title. As is often the case, there was an organised crime figure implicated with links to other mortgage scams,” says Graham. Sydney a fraud hotspot More than three-quarters of fraud investigations by QBE LMI are linked to addresses in west and north west Sydney. Recent investigations by QBE LMI have found large scale fraud using apartment blocks as security. The fraudsters were known to QBE LMI and used straw buyers to purchase the properties. Most of the parties involved were linked via addresses, employers, family or friends. QBE LMI says it’s imperative for lending institutions to have a sound knowledge of any intermediaries they’re dealing with including real estate agents, accountants, lawyers, valuers, developers, accountants and originators. Technology aids and abets Insurance fraudsters are using graphic design software to produce high-quality documents that ‘look’ credible and authentic. They include licence and other identification documents, tax returns, financial statements, deposit verification and credit reports. QBE LMI says its investigations team has noticed that fraudulent document templates are being created and used across multiple lenders. While technology may be aiding the criminal gangs, it’s also being used to catch them. “Mortgage fraud detection technologies are fast becoming an essential risk mitigation tool,” the QBE LMI briefing document notes. “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.” Ian Graham, CEO of QBE LMI