An income verification scheme allowing lenders and HM Revenue & Customs to share data with each other will be up and running by the end of the year.
Lenders will send details of mortgage applications that they suspect to be fraudulent to HMRC, which will check income tax and employment returns against income details declared to lenders. HMRC will in turn use the information to help it assess if the tax information it has been given for applicants is correct.
A spokesman for HMRC says: “HMRC is in advanced discussions with the Council of Mortgage Lenders and other representative groups about operational details of the scheme and governance.”
The scheme follows a pilot scheme between HMRC and several lenders carried out between mid-2007 and January 2010.
In a speech last week, FSA director of enforcement and financial crime Margaret Cole quoted CML figures which estimated that during the 18-month pilot, £111m-worth of mortgage fraud was prevented.