The fraud prevention software that helps lenders detect liar loans

New tool detects what the human eye can't see

The fraud prevention software that helps lenders detect liar loans


By Micah Guiao

A new fraud prevention tool is helping banks and lenders spot liar loans, putting the credit scores and personal finances of those who omit or tweak information to meet eligibility criteria for a mortgage at risk.

According to PricewaterhouseCoopers (PwC), more than a third of loan applicants misrepresent their actual financial position, especially when it comes to living costs and financial commitments. Liar loans have risen in popularity amid a surge in house prices in an attempt for buyers to chase the market.

A liar loan is another name for a stated income loan where the mortgage lender does not verify the borrower’s income or assets and underwrites the loan purely based on the information provided on the application.

USB conducted a similar study and found that in the vast majority of those cases, borrowers said the mortgage broker was the one who advised them to falsify their application.

With this in mind, PwC created the Protect tool, which uses analytics, image forensics, machine learning, optical character recognition and natural language processing to find out if payslips and bank statements in loan applications are authentic or fraudulent. Protect watches out for “fraud that the human eye can’t see, and traditional techniques can’t catch.”

Three PwC directors have left the giant with the belief that Protect could be the next big thing. They have established a start-up called Fortiro to supply Protect to more banks and lenders without potential conflicts of interest. According to iTnews, the breakaway has been in the planning for some time, and PwC will retain a client relationship with the company.

Some Australia-based banks and lenders using Protect include Athena, Bank Australia, Latitude, Plenti, Symple and Wisr.

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