Commercial banks are making a greater effort to screen the documents of mortgage-loan customers, as more than Bt100 million worth of mortgage loans have been granted to wrongdoers who falsified their borrowing documents to get the money and have since disappeared.

The fake documents include bank passbooks, records of payroll payments via banks and ID cards.

Meechai Kongsangthai, manager of retail credit management at Siam Commercial Bank, said one suggestion was for mortgage loan borrowers to provide a reference letter from banks authenticating their passbooks when applying for a loan.

However, the Mortgage Loan Association argues that such a measure may be too harsh and could slow down mortgage-lending growth.

Meechai said most banks were currently using stricter procedures to screen customers' documents to verify that they were genuine.

Many financial institutions report customers falsifying financial documents to borrow mortgage loans to buy condominiums. Some provide genuine documents but borrow the money to speculate on the value of condominiums by selling them again immediately after buying them.

He said his bank refused loans to customers if it was known in advance that the money would be used for speculation.

Meechai said a need for bank reference letters would harm qualified borrowers.

"There is [currently] no need to ask for such documents. It is too harsh a medicine. It might also affect mortgage lending, because the approval process would be delayed. At present, we don't get many fake documents, and most banks have adopted their own cautionary procedures. In the current situation, it's normal to see wrongdoers asking for loans," he said.

Another bank source confirmed that falsified documents had been found - but not that many. Even with verified documents, some customers still find ways to cheat banks, he said. For example, some provide verified documents, but the borrowers and those pictured on ID cards are different people. Some customers also falsify bank passbooks.

Also, in the case of corporate borrowers, soon after being granted loans, they can change their authorised name and address. Before banks can find them, their loans have already turned bad.

"One way to prevent this situation is [spend more time] screening customers' documents. This also delays the approval process. Sometimes when we check a customer's credit risk at the credit bureau, there's no reference to them. Sometimes we find some of them have good credit. But we need to recheck to avoid bad debts. This reduces mortgage-loan growth," he said.

Meechai said Siam Commercial Bank planned to provide mortgage loans totalling Bt45 billion this year. Its total mortgage-loan portfolio stands at Bt200 billion. About 1.5 per cent of the bank's mortgage loans are non-performing.

Over the first two months of this year, there was only sluggish growth in the number of mortgage loans. However, the figure remains normal.

Lower interest rates are only one of several factors affecting mortgage loans. Others include customer confidence, location, transportation, environment, politics and the economic situation.