Fight against mortgage fraud steps up

Nia Williams

March 16, 2010

With nearly £144 billion in mortgages loaned in the last year, this presents an attractive target for criminals. The NFA estimates that the annual value of mortgage fraud is £1 billion, and without continued cooperation, that figure could increase.

“Working Together to Stop Mortgage Fraud” is the NFA’s second update report on the progress the mortgage community is making to address the threat this crime poses to the UK.

The NFA mortgage fraud report notes that significant progress has been made by public and private organisations involved in combating mortgage fraud in the past twelve months, but urges stronger joint efforts by both sectors to more effectively respond to new fraud threats. The report also highlights key issues and shows how the mortgage community is responding.

One of the key issues highlighted in the report is the difficulty lenders and intermediaries sometimes have in identifying fake and falsified documents within the mortgage application process. HM Revenue and Customs ran a pilot scheme to assist lenders and this helped to prevent attempted commercial frauds with an estimated total value of over £111 million.

The mortgage community is fighting fraud more effectively by targeting corrupt mortgage intermediaries, solicitors, licensed conveyancers and surveyors engaged in fraudulent activity. Investigations by the Solicitors Regulatory Authority (SRA) into solicitor involvement in mortgage and other property fraud have saved lenders between £15-20 million.

Land Registry’s increased investment in its anti-fraud activities, including new staff, training, systems and processes to combat the threat, has resulted in preventing fraud attempts against properties valued at an estimated £20 million.

Law enforcement agencies are also increasingly engaging in mortgage fraud investigation. The City of London Police, which is the National Lead Force for fraud, is currently working on 15 investigations into organised mortgage fraud worth millions of pounds, up from four in 2008, with a number of arrests in several cases.

In order to improve the response to mortgage fraud and drive forward the reforms necessary to ensure the mortgage market is secure when economic growth returns, the NFA and the Metropolitan Police have brought together all the key partners in the mortgage community to establish the Mortgage Fraud Forum.

The aims of the forum include:

  • Making it much harder for criminals to commit mortgage fraud
  • Tackling top mortgage fraudsters
  • Increasing awareness of mortgage fraud and the damage it causes
  • Making mortgage fraud a less attractive proposition to criminals
  • Developing and maintaining an up-to-date understanding of the mortgage fraud threat

Commenting, NFA CEO Bernard Herdan said: “In the economic downturn, there has been a reduction in the availability of products that were targets of fraud such as sub-prime, buy-to-let and self-certified mortgages. The economic climate also has increased pressure on lenders to reduce costs, so there has been a greater emphasis on fraud prevention, detection and recovery of losses. The NFA urges mortgage lenders to maintain this robust approach in the anticipated economic upswing.

“Combating mortgage fraud is a key priority of the NFA in our strategy to make the UK a more hostile environment for fraudsters. We are pleased that since we launched the National Fraud Strategy in March 2009, understanding of the mortgage fraud threat has improved and across the mortgage community there is more agreement about the reforms that are needed to combat it. We can only beat mortgage fraudsters if all organisations involved in the mortgage market, both public and private, work together.”

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