As AI-driven mortgage fraud grows more sophisticated, industry experts warn the risks for brokers are no longer theoretical. They are immediate and escalating.
"The risk of fraud for a broker is big," Brett Spencer, co-founder and chief executive officer of AI-powered document company DocuScan, told Australian Broker.
"Mortgage fraud today isn't just about altering a PDF; it's not just mismatched payslips. It's not about numbers that just don't feel right," he explained. "Fraudsters today are leveraging AI to create exceptionally good quality bank statements, payslips, employment letters and identity documents that can all pass that surface-level checks a broker or a broker's offshore virtual assistant are doing."
The rapid advancement of artificial intelligence isn't helping. In fact, it's lowering the barrier to entry for fraudsters while increasing the quality and consistency of fraudulent submissions. Documents can now be created that appear credible at first glance."
"For brokers, that means that the stakes are enormous," Spencer said. "If they don't protect themselves now, they're going to be the first ones to be disaccredited by their aggregator, the first ones to be disaccredited by their bank, and then disaccredited by an industry association."
Against this backdrop, Australian Broker’s three-part series explores how brokers can protect themselves from fraud, what warning signs to watch for and the systems they need to have in place.
Co-founder and chief executive officer of AI-powered document company DocuScan
"There's lots of tells and markers of fraud, if you know what to look for. Some of the red flags include things like having photographs of documents. Or, communication coming from standardized email accounts that aren't work accounts, such as a Gmail or Hotmail account. Any of those free email servers. Also, a bank statement from some place like Commonwealth Bank of Australia (CBA) will never be created using Word or Excel. It's going to be created by an enterprise-grade platform. But a broker looking at a bank statement can't tell that.
Brokers should educate themselves on what is possible in the marketplace and don't turn a blind eye. Ask questions, such as, where was the document created? How was it created? Has the formatting been changed? And look at adopting platforms that are specifically built to detect fraud, such as DocuScan, to review documents. It's what's underneath that layer of text and it's where it's being modified, that metadata layer, that is really important now in accurately detecting fraud. Because if you don't have that information on the metadata layer, what looks like a clean document, you're taking it just at face value."
Mortgage broker at Sydney-based Home Loan Village
"It's more important than ever to have well-thought-out insurance policies in place. Cyber [insurance], in particular, is an obvious one. So good relationships with your aggregator and business insurance broker are essential. And insurance brokers are generally a good, similar industry fit as potential referral sources, as well. So they are great for multiple reasons.
Also, have well-thought-out processes and procedures for verifying documents. At a basic level, things like two-factor authentication on your systems, as well as verification in line, or above, aggregator requirements."
Founder and managing director at Sydney-based brokerage Blue Crane Capital
"Brokers can protect themselves by knowing their clients. Avoid relying on information provided by third parties. Make sure you meet the client to understand their current financial situation, needs and future goals. Source clients, ideally, from trusted referrals, or your own network. Unknown or unsolicited clients can carry higher risk.
Also, follow the compliance framework for supporting documents. For example, obtain at least two forms of income verification, including salary credits via a third party bank statement provider, conduct ABN searches to confirm the employer entity, complete credit checks and review the client’s overall financial position to ensure it aligns with their profile — that is, age, asset position and income level. And, staff training is important. Brokerages should ensure regular training and foster an environment where team members feel comfortable raising concerns.
The main red flags to watch for include inconsistent information, changing narratives, defensiveness or evasiveness, unusual urgency, reluctance to provide documentation, signs of salary staging, unexplained deposits, generic payslips that don’t match known employer formats, missing pages and documents that appear altered, for example inconsistent fonts or edited PDFs."
Founder and director at Sydney-based brokerage Birdie Wealth
"AI is making fraud harder to spot. But the approach for brokers stays the same. The biggest risk is moving too fast or assuming a file is clean. If something feels off, stop. Back your gut and dig deeper. Most issues can be corrected when you slow down and actually check the details. Make sure the story stacks up across everything provided.
Income is certainly a key risk area. Always verify it through reliable sources like open banking tools, such as Frollo, or go directly to the source whenever you can. If there is any doubt, do not proceed. Losing a deal is a better outcome than ruining your career. [Moving forward], AI will keep improving. The response needs to be a stronger process, not blind trust."
Co-founder and director at Melbourne-based brokerage My Mortgage Freedom
"AI doesn't commit fraud, people do. The technology has evolved, but the motive remains the same. As brokers, our responsibility hasn't changed. We cannot allow digital efficiency to become a doorway for vulnerability. As brokers we need to protect ourselves with a back-to-basics approach powered by tech: verifying ABNs, insisting on original live-photo IDs, and using AI-driven portals to catch the metadata discrepancies that the human eye misses.
The big banks are currently exposed because they are slower to pivot and catch this. As smaller, more agile businesses, brokers can adopt sophisticated verification tech faster. By standardising our document portals and maintaining rigorous human oversight, we ensure we are a firewall — not a vessel — for criminal activity."
