Some lenders could be more exposed to mortgage fraud because their underwriting teams are too stretched to adequately check for fraud, according to the FSA.
In a thematic review looking at mortgage fraud committed against lenders, which was published today, the FSA said underwriting staff are too junior at some lenders.
The paper says: “We were concerned that underwriting staff appeared stretched in some firms. Service standards often demanded that applications were reviewed quickly by junior staff who appeared to lack the experience and ability to identify mortgage risk.”
The FSA also noted that although smaller lenders moving into niche business – buy-to-let and sub prime – were able to rigorously check mortgage applications, there are concerns this might not be sustainable when lending volumes increase.