Mortgage Fraud Checkpoint

The following may be a statement of the blindingly obvious, but I am going to make it anyway.

Even though the regulatory responsibility for checking affordability  transfers to the lenders from 26th April next year  there still remains the matter of fiduciary responsibility and fraud. This means that mortgage brokers cannot getaway from the issue.

Of course, the lenders will continue to rely upon intermediaries to provide income data to them as well.

With this in mind we should give a bit of thought to client payslips, now there is an interesting one in terms of fraud. Most of those presented to firms look pretty genuine on the face of it but how can you gather some additional comfort.

There are obvious ones:

• Maths errors in the documents; spelling errors or discrepancies with the names of individuals, the firm and so on. The latter point - spelling-  doesn't automatically make it a fraudulent payslip - after all genuine firms make genuine mistakes in typing sometimes . However, most mathematical errors should be  treated with extreme caution!
• Variation in the look and feel of the consecutive payslips - yes the employer may have changed the layout/ supplier but nonetheless such changes put you on alert for possible fraud.
• Incorrect format of payslip - missing information - either in the pre printed text or in the calculations

There are equally obvious ones that require checking elsewhere to discover:-

• Tax computation errors. You can check this by using HMRC's Tax calculator
• Company names that don't exist. You can check Companies House. Don't forget - and I know that it is a statement of the obvious - but Company names must be unique and if the company isn't listed then it doesn't exist.
• Non-company ( sole traders and partnerships) that don't exist. Every trade or trader these days is likely to have a presence on the internet. If it doesn't Google, then maybe soemthing is wrong.
• Addresses or otehr details that differ from those provided by the client

Some checks can give a greater sense of comfort but don't prove that a payslip is genuine. The most  obvious is that of income-fed bank statements. Yes if the amount and the date etc  matches the bank statement provided, then there is a greater likelihood that the thing is genuine but there are also a great many fraudsters who can produce matching payslips and bank statements - it is not rocket science.

Please don't take these comments as the definitive approach to verifying payslips becasue it is not. These are merely pointers to  some levels of checking. They are not intended to be  comprehensive or foolproof. Even if you carry out all the checks you can think of, the fraudster may still get past you. After all the clever ones will have covered many of the options. However, the less smart ones won't have. AND, and it is a big AND, if you have carried out these kinds of checks you have something to argue with both the lender, when they advise you that you have been removed from their panel ( ok don't get your hopes up becasue frankly its usually immovable) or the FSA/ FCA when they ask you to explain how you mitigate the risk of your firm being used for financial fraud.

Regardless of 26th April 2014, you still have  a responsibility ( to yourself as well as others) to satisfy yourself that the client has provided bona fide documentation to you.