15:17 PM, 8th March 2011, About 11 years ago
Fraud investigators are cracking down on brokers falsifying mortgage applications.
More than 3,500 fraudulent mortgage cases were picked up by CIFAS, the UK’s fraud prevention agency last year.
The figure was 18% up on the 3,000 cases detected in 2009.
Around 2,500 of the cases in 2010 came from mortgage brokers.
Most mortgage frauds (96%) focused on falsifying application forms to trick lenders in to believing borrowers were eligible for loans when they were not.
The main ploys were:
Mortgage-related identity frauds fell – to 15% of cases in 2010 compared with 33% in 2009.
Presenting false or altered documents, stating false income, or providing false employment details have all decreased from more than 66% of mortgage application frauds in 2009 to around half in 2010.
CIFAS discovered a lot of mortgage business is carried out long distance.
A broker based in Leeds might arrange a mortgage without ever meeting a client from Southampton. This means many documents are delivered by post or online without any face-to-face meetings.
CIFAS also claims many mortgage brokers are under financial stress due to the stagnating housing market and find lenders are less likely to agree a mortgage as their credit scoring rules out many applicants who would have had a loan granted prior to the credit crunch.
These twin pressures to earn an income and keep customers lead some brokers to falsify documents and applications.
Overall, CIFAS reports fraud generally declined in 2010 to a total of 217,385 offences – but this trend is still a 25% increase in the past five years.
Richard Hurley, CIFAS Communications Manager, comments: “While the small decrease in fraud identified in 2010 is welcome, the threat has not gone away, and it must be viewed in its proper context: as the latest in a series of changes that have taken place over several years.”