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Written by rosalind renshaw

A new scheme has been launched to combat mortgage fraud. Whilst extra checks will be performed on some applications, anxious borrowers are being told that there should not be delays.
 


HMRC, the Council of Mortgage Lenders and the Building Societies Association are behind the Mortgage Verification Scheme.



Use of the scheme will be limited to cases where lenders reasonably suspect, following their own checks, that mortgage fraud may be taking place. 
 
Lenders will send relevant details using a secure electronic platform to HMRC, which will check income details declared on mortgage applications against information provided in income tax and employment returns. 

HMRC will then advise lenders whether or not the details correspond. 


 
As well as aiding mortgage fraud prevention, the scheme will help HMRC to risk-assess whether the information it has been given on applicants’ tax affairs is correct.

Financial institutions will not rely solely on responses provided by HMRC to reach a decision where the lender suspects fraud.
 
HMRC has set up a specialised unit to deal with the requests.

Any mortgage lender who wishes to use the scheme may do so. Other than a fee of £14 plus VAT per case to cover HMRC’s costs, lenders face no additional fees to participate.

It is not anticipated that the scheme will have any significant impact on the time taken to reach a lending decision.
 


CML director general Paul Smee said: “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 of HMRC Risk and Intelligence Service, said: “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.”

Comments

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    So you support an end to the Support for Mortgage Interest Scheme then Ray, which is currently keeping 300,000 households in properties they can no longer afford?

    How about the pressure the government is putting on banks not to repo the properties of those who are behind on their mortgage payments?

    • 03 September 2011 17:49 PM
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    Not so!

    All of you who welcome more and more government legislation over all walks of life are being led by the nose by the control freaks in suits. We will soon need a licence to breathe. Vote for less controls not more.

    • 03 September 2011 16:03 PM
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    Fantastic idea.

    • 03 September 2011 07:11 AM
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    At first glance it looks sensible. However tax record are at least 1 year out of date. If you earned 20k last and got a new job on 30k this year the records would not update until your P60.

    If self employed the figure would be taxable income. taxable income is the net figure after depreciation and amortisation (both non-cash items that are legally used to offet against true cash profits) this means if you legitimately use allowances to reduce your taxable income you are effectively reducing your borrowing power at the same time.

    If these check are actually going to used to sanity check rather than absolutely check, then all well and good. If its for absoulte checking, its going to penalise people who have done well and got a new job on more money - or if self employed, it will be yet another reason not to bother.

    • 02 September 2011 15:09 PM
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    ANY more powers to the taxman is NOT a good idea!
    Once granted they will expand it far wider than enviisaged.
    (as any other government organisation would for that matter)

    • 02 September 2011 14:49 PM
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    I think this is a great idea!

    • 02 September 2011 14:31 PM
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    Brilliant news however wish it happened earlier.

    • 02 September 2011 14:13 PM
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    RnR spot on.

    It's just a shame the scheme isn't going to check back on previous liar loans. I was always "amazed" how many of Peterborough's taxi drivers only earned £6k p.a. yet still managed to afford £150,000 mortgages.

    • 02 September 2011 13:01 PM
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    Anyone who, ahem, took advantage of the previous lack of oversight might have fun trying to remortgage...

    • 02 September 2011 11:23 AM
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    Wow it took some time coming around...does anyone think this is a bad idea?

    • 02 September 2011 09:53 AM
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