New fraud prevention scheme could see more mortgage applications go to HM Revenue and Customs (#HMRC) for double-checking.
Under the Mortgage verification Scheme, HMRC is offering lenders the chance to pass on details of mortgage applicants for scrutiny.
Should the information on the mortgage application fail to match the details on applicants’ tax returns, HMRC will inform lenders of the discrepancies.
The scheme is designed to prevent mortgage applicants from overstating their earnings in order to secure more funds than they would otherwise be entitled to.
Lenders can contact HMRC in those cases where they have been provided with insufficient evidence on an application or where they suspect some level of fraud.
The scheme was outlined in the 2010 Budget.
HMRC has been partnering both the Council of Mortgage Lenders (CML) and the Building Societies Association (BSA) in setting up the pilot programme.
The scheme is voluntary and costs lenders a fee of £14 plus VAT to run a check with HMRC.
The CML pointed out that as well as combating mortgage fraud, the checks allow HMRC to assess whether the tax information they have been given tallies with the stated earnings of individual mortgage applicants.
Paul Smee, the director general of the CMIL, commented: “Lenders have found during the pilot that the scheme has been very useful in helping them to lend responsibly.
“It has helped them to avoid lending in some cases where there is a risk of fraud, at the same time as giving them confidence about the borrower’s credentials in some cases that they might otherwise have felt compelled to refuse.”
Colin Barclay, assistant director at HMRC’s risk and intelligence service, added: “HMRC are determined to tackle fraud wherever we can. The Mortgage Verification Scheme is an unprecedented opportunity for HMRC and lenders to work together to combat fraud in the mortgage industry.”