The HMRC Mortgage Verification Scheme Launches

Since March 2010, when the new scheme was announced in the budget, HMRC, the Council of Mortgage Lenders and the Building Societies Association have been involved in a pilot scheme to assess how practical it would be for HMRC to check tax records against mortgage applications to help prevent mortgage fraud.

Following the success of this pilot, on 1st September HMRC launched the Mortgage Verification Service. The service allows mortgage lenders, for a small fee, to check whether the information that a prospective borrower has provided to them can be confirmed by HMRC records, or if the information provided (to either the lender or HMRC) disagrees.

The service is intended to be used where lenders reasonably suspect that mortgage fraud may be taking place, so it isn’t for every case; however, it does mean that in cases where fraud may only have been suspected in the past there will now be greater certainty. It may also mean that cases which would have been refused may be accepted.

Although it is intended for cases that are likely to be fraud, the low cost to lenders, just £14 per check, means that they may carry out other random sampling or use it when they might previously have come back to the adviser. This reinforces the need for you to be vigilant and to make sure you are entirely satisfied that your customer’s income details are genuine. In the event that you do have doubts you may also find that telling customers this could happen will help to prevent attempts to use you or your firm to commit mortgage fraud.

The Council of Mortgage Lenders does not anticipate that this scheme will have any significant impact on the time take to reach lending decisions.