Working together to prevent mortgage fraud

Mortgage fraud happens when false or altered information is used to secure a mortgage. It is estimated to cost the UK £1.3 billion annually, with 84 in every 10,000 applications suspected to be fraudulent.*

The role of a mortgage intermediary is crucial in the house-buying process and the bridge between the borrower and lender. And this position makes intermediaries a potential target for fraud. To safeguard both yourself and your client, you must remain vigilant and follow best practices in fraud prevention.

Understand the types of mortgage fraud

Mortgage fraud typically falls into two categories:

Fraud for property

Often opportunistic, where applicants misrepresent their financial situation to secure a mortgage they wouldn't otherwise qualify for.

Fraud for profit

More organised, involving multiple parties (including professionals) to extract money from lenders through inflated property values, false identities or fictitious transactions.

Identifying potential mortgage fraud

Who to keep an eye out for

People don't always choose to commit fraud. Mortgage fraud can be committed by genuine but desperate people who don't realise they are committing fraud, or the implications of what they are doing.

They are often driven to secure a mortgage on a property after facing pressure from their family and they may do this by exaggerating their income. As many as 1 in 6 adults will exaggerate their income to secure a mortgage.**

There are professionals who commit mortgage fraud for the sole purpose of financial gain. They are experienced and often linked to organised criminal groups. They will have a deep understanding of the industry and how to avoid controls.

What to look out for when reviewing documents and information

Robust identity verification - verifying a client's identify is a legal and regulatory requirement. Intermediaries must:

Use original documents that are current and authentic.
Consider electronic verification tools, ensuring they are robust and draw from multiple and reliable data sources.
Be cautious of clients who resist providing documentation or whose documents raise inconsistencies.

There are specific elements to keep an eye out for when you're checking documents. There is further detail on this below.

Payslips This will reveal additional content

When you are collecting your clients' payslips, keep an eye out for:

Tax - correct tax code, regular payment of tax and correct tax calculations.

Rounding - rounded numbers are extremely rare on genuine payslips

Benefits - check that additional benefits match the wage and job status

Format - check the format matches the type or size of the employer.

Staged income This will reveal additional content

When you are checking your clients' income look out for staged income. Staged income is where applicants create fake income streams and regular payments throughout the application process, which end after completion. Be aware of:

Applicants who are only employed for a short time before the mortgage application.
Salary credits paid by 'Faster Payment' instead of BACS.
Changes in job types that appear out of line with previous roles.
A recent second job where income is needed to support the application.
Employers who are small or difficult to trace, or are a family member.

What you need to confirm your clients' details and income

Employment income

The details required for proof of income, bonuses and additional types of income.

Proof of employment income

Providing proofs

When applying for a mortgage we may ask to see some proofs to help confirm your clients identity and details.

Documents to provide

Important:

If you believe you have spotted mortgage fraud while working with your client on an application, please email us on tellsid@nationwide.co.uk.

How to protect you and your clients from mortgage fraud

Know your customer and source of funds This will reveal additional content

Mortgage intermediaries must conduct thorough due diligence on clients, including:

Understanding the source of deposit funds - especially if deposits are from overseas or third parties.
Identifying unusual patterns, such as large cash deposits or inconsistent employment history.
Being alert to gifted deposits that do not have correct documentation or explanation.
These checks are vital not only for mortgage fraud prevention but also for compliance with anti-money laundering (AML) regulations.

Spotting application red flags This will reveal additional content

At the application stage, intermediaries should be alert to:

Inconsistencies in income, employment, or address history.
Multiple applications from the same client to different lenders.
Pressure to expedite the process or bypass the standard procedures.
Use of false or cloned documents, such as payslips or bank statements.

Maintain strong internal controls This will reveal additional content

If you’re part of a firm it’s likely they will support you with controls and activity to spot and prevent mortgage fraud, you might have access to:

Clear policies and procedures for fraud detection and reporting.
Regular staff training on emerging fraud trends and regulatory updates.
A culture of whistleblowing and accountability, where concerns can be raised without fear.
Some firms have access to technology like a CRM system, with audit trails and alerts for suspicious activity.

Stay up to date on mortgage fraud

We encourage you to stay up to date with guidance to help protect against mortgage fraud, you can find this from the FCA and UK Finance, as well as other professional bodies.

To help you stay up to date, we have created videos to help you identify potentially fraudulent applications. Our mortgage fraud and AI video explains how AI is used to commit mortgage fraud and includes examples and tips on how to spot AI-generated content, IDs, and documents. Our case studies video features real-life examples shared by our experienced investigators.

Protecting against mortgage fraud

There are also steps you can take to help us protect against mortgage fraud:

Accurate client details

Ensure the clients details you enter into our systems are accurate (mobile, email and address) and do not enter your own details.
Check clients are they who they say they are

If you are working with a new client, check they are who they say they are. Use Companies House, LinkedIn or other social media channels.
Report suspicions as soon as possible

Please email tellsid@nationwide.co.uk or get in touch with your Business Development Manager, and we'll do everything we can to investigate.

*Fraud costs the UK economy £193 billion a year, equating to more than £6,000 lost per second every day - Experian UK.

**Cifas research reveals 1 in 6 UK adults have exaggerated earnings to secure a mortgage.