by clicking the arrows at the side of the page, or by using the toolbar.
by clicking anywhere on the page.
by dragging the page around when zoomed in.
by clicking anywhere on the page when zoomed in.
web sites or send emails by clicking on hyperlinks.
Email this page to a friend
Search this issue
Index - jump to page or section
Archive - view past issues
Connexus : Issue 43
disclosed on the loan application. “We fnd things like Centrelink payments coming into statements. Then you have a look at the loan application and the income that has been declared, and quite clearly these people shouldn't be entitled to a Centrelink beneft. "So either they are defrauding the Commonwealth or they have a false declaration somewhere in their loan application. It has to be one or the other." Whether the employer is registered for GST can be another simple giveaway. "If they're not, it means their turnover is less than $75,000. You then have to have a look at how much income the employee is claiming, and is it reasonable?" McKenzie describes another situation that should prompt further scrutiny: the full-time student ear ning, say, $7,000 a month; also, where a bank statement shows inconsistent values. "If something doesn't look right it probably isn't." Consistent stories One trap lenders can fall into is looking at documents in isolation, rather than across an entire fle to make sure that they present a consistent story. Seeing a ‘red fag’ doesn’t necessarily mean there's a fraud on the fle, says LeRaye. "It just means there is some sort of irregularity that is probably worthy of some further investigation or validation." He advises lenders to trust their instincts and validate the information wherever possible. And be aware that preventing fraud can start at the referral stage. "Mutuals should ensure they know their referral sources," says McKenzie, "and have a strong understanding of where the deals are coming from." Christine Long is a freelance writer. Stealing identities Fraud for pro t can involve large-scale syndicated fraud and multi-lender fraud. Fraudsters can steal the identities of people who own their properties unencumbered, says Debbie McKenzie, senior manager, investments, at QBE LMI. "Criminals acquire loans masquerading as these people, using their property as security, and victims are unaware they have been targeted until they are contacted by a bank chasing loan repayments," she says. In the case of multi-lender fraud, a number of lending institutions are targeted simultaneously. "This has increased as specialised crime groups gain increased knowledge of lending practices. These criminals know how to manipulate the system for their own means and quite o en include other intermediaries who are coopted or recruited to participate." A major risk Mortgage fraud and 'so ' lending fraud are among the biggest risks that mutuals face every day, according to Leanne Vale, senior manager fraud and nancial crimes at the Customer Owned Banking Association. She says the association sees as much as $5 million in lending fraud every year among members, and it's growing. "Fraud is an ever-present and potentially business-crippling risk. It takes a signi cant number of quality loans to make up for one fraudulent or non-performing loan," says Vale. The association fraud team has always worked closely with LMI insurers to, for example, run training tailored for lenders that aims to help detect 'red ags' and anomalies in lending applications. Given the issue's importance, lending and mortgage fraud is always a focus of the association's fraud symposiums and there have been sessions for members with detectives from the NSW Police Strike Force Apia, established to investigate cases of large, complex mortgage fraud. In a recent case, 16 people were charged with more than 100 o ences relating to fraudulently obtained loans worth $16 million. Victoria Police also worked with the association fraud team and members on a $5 million lending and identity fraud case in 2012 for almost $5 million that is currently before the courts. Vale says fraudsters o en know the system well enough to complete loan applications that are designed to score perfectly against lending criteria. "Our best practice focus for lenders is for them to work closely with fraud prevention experts within the business to understand contemporary fraud trends and common factors across the business. When criminals know your weak point, they will actively exploit it and with mortgage fraud the risk levels are so much higher," she says. Meanwhile, intense industry competition leads to pressure on lending targets that can bene t fraudsters, says Vale. "Lending targets are absolutely necessary to ensure business growth -- but don't forget the quality control. "Fraud prevention should not be seen as an impediment to business. Rather, once you get it right, it is essential to growing a healthy business," Vale says. www.customerownedbanking.asn.au 33