The number of cases of fraud throughout the mortgage industry has been steadily rising in recent years, with the figures for 2020 also being higher than in previous years. The spread of the coronavirus pandemic and the increase in remote operations may have been a key contributing factor in this, according to certain studies.
However, regardless of the reasoning or root cause, it’s clear that mortgage fraud isn’t going anyway and may only become more dangerous and deceitful as the years progress. Mortgage fraudsters, who can operate on both the borrowing and lending sides of the mortgage industry, increasingly find newer and more elaborate ways to trick their targets. Mortgage fraudsters will take advantage of you because you do not understand how a mortgage works or comprehend any UK mortgage acronyms and terms.
This is why it’s absolutely vital for all those involved with mortgages, from new buyers and existing homeowners considering refinancing to banks, lenders, and other financial institutions to all be aware of the latest trends and know some of the warning signs to watch out for. Read on to learn more about some of the latest trends in mortgage fraud.
The Number of Successful Frauds Is Rising
One of the most worrying statistics from recent times in the realm of mortgage fraud is the fact that the incidence rate of successful frauds among lenders is rising, year on year, especially in the digital space. Figures for 2020 showed that the number of digital mortgage frauds increased substantially compared to 2019.
As explained above, this rise in digital crime can be traced back to the emergence of COVID-19, which has forced more businesses to be carried out online. Doing things digitally can be much more convenient, but it gives savvy fraudsters more room to operate and more ways in which they can potentially deceive their targets.
The Cost of Fraud Is Also Rising
Another worrying factor from the latest set of statistics on mortgage fraud is that the cost of each fraud is continuing to rise. Indeed, over recent years, fraud costs have risen year on year, almost never decreasing in any substantial way. To be more precise, every $1 of fraud equates to over $3.50 in costs for lenders.
This means that with every year that goes by, lenders are paying out more and more money due to fraud, damaging business projections and harming their chances of future success and survival, which have already been damaged by recent turbulent events.
This constant rise is attributed to the fact that scammers are consistently coming up with new ways to carry out their schemes, and the rate of improvement in terms of identifying and catching such scammers simply isn’t fast enough at the moment.
Bots Are Increasingly Being Used in Mortgage Scams
The use of bots for cyber-crime is well-documented; hackers and scammers of all kinds will often make use of vast networks of bots – commonly referred to as botnets – in all kinds of cyber-attacks. The data from the world of mortgage fraud suggests that such bots are also being used to commit mortgage scams with increasingly regularity too.
Back in 2019, less than 5% of mortgage frauds involved the use of bots, but for 2020, bot attacks targeting mortgage lenders rose to over 15%. While bot detection technologies are always improving, it’s clear to see that bots are going to become one of the most-used weapons for fraudsters and scammers as we move forward, and lenders will need to respond accordingly with their own security.
Verification Problems Plague Lenders
One of the biggest problems with mortgage fraud, especially digital mortgage fraud, is that it can be so difficult to spot until it’s already too late. Data and surveys from lenders in recent times back up this claim, showing that verification of applicant identities, personal details, and even devices can be immensely challenging.
Many lenders say that confirming the identity of their applicants is a real challenge, even with the aid of innovative new tools and technologies, and this is clearly an area in need of overhaul and improvement in the years ahead. For now, it’s simply too easy for scammers to falsify their identities and deceive lenders.
Keeping up with trends in mortgage fraud is one smart way for lenders to stay ahead of the game, ready to respond to new threats and take precautionary measures ahead of time in order to avoid falling victim to scammers and fraudsters in the future. These trends show that mortgage fraud is becoming more prevalent, more costly, and more varied, so being prepared is more important than ever before.