On the Alert for Mortgage Fraud

In the September edition of Mortgage Finance Gazette, Peter Stimson, Managing Director - Financial Risk at Landmark provides a detailed view on the technology that is key in helping mortgage lenders stay one step ahead of fraudsters: 

Peter Stimson

"The latest studies in to the scale of mortgage fraud are reporting some positive figures.  Experian’s most recent analysis into fraudulent mortgage applications identified that the number of such applications had decreased from 30 applications in every 10,000 identified as fraudulent during the last year, compared to 38 in every 10,000 during 2012 and 34 in every 10,000 in 2011.

While this may sound promising, it is worth remembering that as well as Experian only covering a limited amount of the market, lower fraud detection rates don’t always equate to less fraud.  It could well be that methods being used to detect fraud are becoming less successful, as mortgage fraud prevention is essentially an ongoing ‘cat and mouse’ game between lenders and fraudsters, as fraudsters adapt their attempted frauds by using alternative means.

Technology is key in helping lenders stay one step ahead of fraudsters. By implementing intelligent or automated detection systems that proactively alert lenders to discrepancies, it is possible to police a large number of avenues that fraudsters may be using to try and access the funds they want.

Having the ability to automatically investigate application and property data is where software tools really come into their own.  In the past, fraud detection meant manually analysing mortgage applications, which as well as being very inefficient, is also very inconsistent as a large number of frauds are missed. Spotting anomalies in complex data by ‘hand’ is very difficult. In short, it is simply not possible for risk teams to manually analyse cases to the extent that detection systems can, particularly taking into account the wide range of routes that fraudsters attempt to use."

To access the full article, please visit the Mortgage Finance Gazette website: 

http://www.mortgagefinancegazette.com/features/on-the-alert-for-fraud/