Mortgage scam threat to genuine homebuyers

Auckland financiers involved in uncovering mortgage credit scams fear the deceptions could cost consumers and banks dearly.

James Lockie, a principal of mortgage broking firm Cairns Lockie which has $280 million loaned for home mortgages, said his firm complained to the Serious Fraud Office when it found altered credit documents supporting loan applications. He is worried by a string of mortgage scams which he said were almost impossible to detect.

And an ASB Bank spokeswoman this week predicted the banking public would suffer from the string of mortgage frauds. Loan applications might be denied or delayed, creating inconvenience as customers faced more red tape, she said.

"It's not good enough to say it's the banks that miss out - customers are inconvenienced by this too and we really want to get to the bottom of it," she said.

Lockie said the current system of fining offenders provided little deterrence. For example, independent mortgage broker Dyan Margaret Tucker of Auckland was convicted in 2002 of reproducing a document with intent to defraud.

But Lockie said she had made $14,000 from the scam and was fined only $4000 so the system provided little deterrence.

Lockie is also concerned about the availability of property titles through the Government's Land Information New Zealand which holds all land survey and ownership details.

"Anyone can get the title to a house from a LINZ office," he said, adding that there was no onus to prove who they were or why they required a copy of the title.

Robert Andrell, acting register-general of LINZ, said anyone could find out who owned a property by searching the public register. Hard copies of certificates of titles had not been issued since 2002 but banks and solicitors searched the register electronically to find who owned properties.

In the most recent case, the bank and lawyer had not matched the identity of the registered property owner with the identity of the person presenting themselves as the owner, he said.

Lockie's partner William Cairns said the industry feared identity fraud far more than inflated valuations. Lenders found it hard to catch out imposters, he said, whereas borrowers who submitted altered valuations were easier to hook.

A Westpac spokesman confirmed the Auckland woman who stole $180,000 from ASB Bank had used a fake credit card from Westpac.

"All her forms of identity were false, including the Westpac credit card which could have been a piece of plastic or a photocopy of the document," he said. "We're aware of these sorts of scams but the amount of money involved compared to the total mortgage book is relatively small."

A former Auckland banking valuer blamed Australia's takeover of the banking industry here for the spread of fraud. Most banks had axed their valuation divisions in a push to lower costs, he said, yet these sections had guarded against scams by checking property titles, ownership, applicants' details, sales history and comparing valuations before agreeing to a loan.