"We regularly see clients trying to pull the wool over the brokers eyes, or brokers that find themselves too close, too embroiled or just too busy to spot potential red flags."
At our recent Lender Fayre, a consistent theme among the lenders was the worrying rise in mortgage fraud in the market. Not only is it a real threat to lenders, it’s a growing challenge for brokers and one that can have devastating consequences.
The issue has been amplified in the current market with higher interest rates and stretched affordability making it much harder for the numbers to add up. While many will say it will never happen to them, we regularly see clients trying to pull the wool over the brokers eyes, or brokers that find themselves too close, too embroiled or just too busy to spot potential red flags.
At Just Mortgages, we have seen several brokers fall foul of clients and their ever-increasing ability to try to commit fraud. Through the diligence of the Just Mortgages fraud team, we prevent brokers from being exposed - it is one of Just Mortgages’ hidden, but very important benefits to our brokers.
Examples of mortgage fraud
It can often be those textbook cases with doctored documents or fake second jobs to exaggerate earnings. In these cases, clients may drip feed documents to make it harder to build a complete picture. They may also come from the most unlikely of places, including friends, family and close contacts.
One of our brokers was arranging a mortgage for a family friend who was a teacher. The broker knew she worked at the school and even found her profile on the school’s website. It transpired that she was actually a teaching assistant and had cleverly doctored payslips and bank statements to manipulate her earnings. The broker was absolutely devasted as he’d known the family for years. Sometimes a little bit of truth can be very dangerous - it’s very easy to be lulled into a false sense of security.
Similarly, we have also seen examples of dishonest introducers, where a broker has been referred cases by an accountant, for example, who are well placed to manipulate income.
Scheme abuse, which can be so subtle remains prevalent too. This could be a “back door” buy-to-let disguised as a residential purchase, or a first-time-buyer fronting a purchase for extended family. In short, brokers are up against it more than ever and from a multitude of angles.
Getting the fact find right
Sometimes, a simple misunderstanding or even a badly packaged deal can look like fraud and alert a lender. We’ve caught cases like this just in time, whether it’s not asking enough to distinguish inheritance from a gifted deposit or where a full-time job was actually an apprenticeship contract.
It’s a clear reminder that in all circumstances, we absolutely need to get the fact find spot on. If this isn’t done thoroughly and those extra details aren’t uncovered, there’s so much that could go wrong. Not having the right information means its not presented to the right lender in the right way and leads to difficult questions and potential complaints.
Positioning is absolutely critical too – framing that fraud conversation early to deter those simply trying to push their luck. Many don’t understand the implications of fraud, both for the borrower and the broker. If they did, they may just think twice. Encouraging clients to disclose early is common practice for protection and insurance, yet not so much for mortgages. The more a client can tell the broker, the better job they can do – we have to position this more clearly.
Hung out to dry
The consequences for brokers are severe, with the prospect of being taken off panel and losing their livelihood. We have seen and heard anecdotally of networks hanging brokers out to dry - terminating contracts at the first sign of an issue, with similar stories over complaints too.
That’s certainly not our approach at Just Mortgages. If a lender contacts us or we proactively spot an issue, we throw our arms around the broker to re-train and help them understand what happened and how to avoid it in the future. Our aim is to get the broker back in a position to confidently submit good quality business and to be a better broker.
Sometimes, brokers can be their own worst enemies by not asking for help or worse, assuming that it will never be their issue. Alongside regular spot checks, packaging checks and observations, we encourage brokers to proactively refer cases if something doesn’t look quite right. We also host regular training, including a recent company-wide fraud refresher, and attend team meetings.
Such is our proactiveness and due diligence, lenders have told us that if certain brokers weren’t working for Just Mortgages, they would have been removed from panel. Lenders trust us with this risk and to manage it properly. It’s a huge responsibility and one we don’t take lightly.
A brush with fraud shouldn’t be the end for a broker, but a warning shot to seek support and improve standards. That’s firmly our belief at Just Mortgages and we have watched brokers devastated by fraudulent cases engage with the fraud team and bounce back to become far better brokers. It’s certainly the most rewarding part of my job.
