The Freud of Fraud: The changing face of the Liar’s Loan Application

Sheer fabrication of borrower’s financial information was at the epicentre of the 2008 subprime crisis. Fast forward to 15 years, the economics of deception has further evolved garnering a particular level of sophistication, that deserves much more than manual attention. This has severe ramifications for reputational damage, and detrimental impact on bottom line in an already difficult economy.

2023 has its own unique challenges in a hyper-competitive mortgage market fuelled by a rising rate regime, a constrained housing supply and burgeoning inflation. This often attracts abusive and malicious intentions to exploit individuals, banks, and intermediaries, often conducted by uninformed applicants or as part of serious organized crime. Correct, complete, and consistent data that is also compliant to the regulation-intensive industry, is fundamental to accurate and sustainable lending decisions. Companies are leveraging OCR technology to make this a reality.

While lenders are becoming more astute to detect falsification by maintaining high standards of due diligence and increasingly exploring OCR technology in areas like know your customer (KYC), income and employment misrepresentation on documents or deposit fraud continue to require cumbersome manual interventions and often plague such institutions if not spotted in time. As lenders continue to transform processes to deliver a seamless mortgage journey and flexibility to their borrowers, their battle strategy to quickly identify and respond and build operational resilience when volumes pick up, needs to be reimagined. The phenomenon is further exacerbated by the new normal of hybrid working.

Evidentiary documents once provided physically to the broker or the advisor are now exchanged online, making the broker unintentionally susceptible to fraudulent activities of document tampering, counterfeit, or forged evidence. Such opportunistic fraud, often not a “fraud for profit”, may be perpetrated by an otherwise innocuous applicant misstating, misrepresenting, or omitting information, looking for favorable loan terms and lower rates. Another instance is when the genuine purpose of the property is misstated, again for favorable terms. Although residential mortgages continue to witness such cases infrequently, commercial mortgages saw a significant jump in fraudulent activities reported during the Government Bounce Bank Loan scheme tenure. The consequences to the perpetrator are severe if detected, but as the old adage goes, an ounce of prevention is worth a pound of cure.

Unveiling the Power of Deep Learning OCR in Fraud Detection. In the ever-evolving landscape of fraud prevention, Deep Learning OCR stands as a formidable ally. With Revel, we delve into the world of cutting-edge technology to explore how Deep Learning OCR is transforming the way we combat fraudulent activities. From instantly extracting and analyzing data from documents to enhancing accuracy in identity verification, there is immense potential of Deep Learning OCR. Revel is harnessing this revolutionary technology to fortify fraud prevention strategies. Stay ahead in the battle against fraud!

Albeit heavy duty compliance teams and seasoned underwriters are on the front line to diagnose fraud risk, screening and document analysis led technology remains a core defensive strategy for any lender’s preventive approach against fraud. Lenders and intermediaries need to work closely together to keep a close watch on the creativity that entails fraud and educate through dialog. If you are curious to know more about the industry leading techniques in affordability fraud detection or deep learning OCR tech – learn about how Digilytics AI can help make the journey with documents smoother, reach out.

Author: Reetwija Chakraborty, Head of UK Distribution

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