The Mortgage Fraud Red Flags the FMA Wants Caught
Warwick Slow
The FMA has made fraud detection a priority for 2026/27, with mortgage fraud front and centre. It's sent lenders, aggregators and adviser associations a list of red flags for fraud pursued for profit by third parties.
If you write mortgage business, this lands on you. The point isn't to turn you into an investigator. It's to stop the obvious signals sliding past because everyone assumed someone else was checking.
There are really only two things to hold in your head: what looks off on one file, and what looks off across several.
Signals on a single file
Red flag | What it looks like |
|---|---|
False income info | Fake job offer letters, attestations that don't match payslips, a recent job change into a role with no relevant experience, income that jumps at application time with nothing behind it, falsified rent or boarder payments |
Dressed-up money | A "gift" that's actually a loan, falsified gifting certificates, a debt said to be repaid personally when it was cleared via KiwiSaver First Home Withdrawal or never repaid at all |
Omissions | Undisclosed dependents or third-party debt |
Impersonation | Fake or hijacked borrower emails, forged signatures, signature images used without consent, agreements altered without the borrower knowing |
S&P inconsistencies | Reported price differs from the agreement, vendor name doesn't match the title, pasted signature images instead of a proper e-signature provider (Adobe, DocuSign) |
Valuation issues | Quick resale at a much higher value for no clear reason, cosmetic work without Council consent, multiple valuations obtained with the highest one used |
Private sale | No agent involved, property advertised on social media |
Vulnerable client | Low financial capability, doesn't understand the transaction or isn't aware of key documents |
Any one of these can be innocent. Each is just a prompt to ask a question.
Patterns across files
This is what the FMA actually cares about. Fraud for profit usually needs more than one party working together. The FMA's list covers everyone in the chain: valuers, lawyers, advisers, lenders' own staff. The vast majority do the right thing. Fraud for profit tends to involve the rare few who don't, working in unison.
So the sharper question isn't "is this one thing off". It's "are several things off, and do they keep pointing at the same valuer, adviser or law firm". That's the difference between a coincidence and a ring.
What to actually do
Build a few checks into your standard process so it's not left to memory:
Sight original income documents and sanity-check sudden jumps
Confirm signatures came through a proper e-signature provider, not pasted images
Ask where gift money and repaid debts actually came from
Note when the same valuer, lawyer or vendor keeps reappearing across your files
Slow down when a client clearly doesn't understand the deal
If something doesn't sit right, raise it rather than push it through. The FMA has active mortgage fraud investigations running now and has said it will hold people to account.
Final word
You're not policing the whole chain. You are expected to have systems that catch the obvious stuff and to act when a file trips flags. Getting these checks into your workflow protects your clients, your licence, and you.
If something doesn't sit right on a file and you want a second opinion, reach out to the KAN compliance team. That's what we're here for.