The Australian mortgage industry is open to the same kind of spiralling fraud that is hitting the United States, according to Sydney based law firm and fraud specialist Hunt and Hunt.
The firm said last week that over reliance by financial institutions on third-party brokers has paved the way for organised fraud groups to infiltrate the market.
Hunt and Hunt partner Brenton James said that mortgage fraud was pervasive and growing in the US could soon be hitting Australian shores.
"A recent ruling in the Supreme Court of NSW . . . highlighted the ease with which benefit can be gained through fraud, in this case a forged signature on a mortgage application, and how vulnerable the industry is to more widespread fraud of this and other kinds," James said.
Mortgage fraud can take many forms but some of the more popular scams include equity skimming, where criminals target homeowners who are behind on payments and need to sell their homes quickly to avoid foreclosure.
The buyer collects rent for a time, but does not make any mortgage payments and allows the lender to foreclose.
James warned of other scams such as property flipping, when a property is bought, falsely valued and then quickly sold on.
Identity theft in order to secure loans is also popular with con artists.
Slowing housing sales and a big rise in foreclosures in the US has led to a leap in cases of mortgage fraud as unscrupulous con artists take advantage of struggling homeowners.
