Halifax and Nationwide were duped by Birmingham fraudster ‘The General’
Halifax and Nationwide Building Society have been named as lenders defrauded by Mohammed Suleman Khan, the jailed Birmingham fraudster known as ‘The General’.
From 2003 to 2010 Khan and his associates used forged documents – likely payslips and P60s – to get a mortgage on 21 properties in the suburbs of Birmingham. These were renovated and rented out mainly to students.
West Midlands Police revealed that while a number of mortgage companies were duped, the ‘main ones’ were Nationwide, Halifax, as well as Beacon Home Loans and Preferred Mortgages, who are now both defunct.
It was reported that three of Khan’s allies, including his brother and a bent broker, were ordered to collectively pay back £13m raked in from the mortgage fraud last week.
‘The General’ used his gains to build an estate in Pakistan modelled on Buckingham Palace.
He was originally sentenced to four years in prison 2013 for defrauding the taxman in April, but was later hit with an extra 10 year sentence for refusing to pay back £2.2m.
Brian Pitt, who has been in the mortgage market for 40 years, was a director at Beacon Home Loans from 2003 to 2006 and has also worked for Halifax, Household Mortgage Corporation, Future Mortgages and Kensington. He is now group chief executive of Rockstead, an asset, business and process review company.
Pitt said: “There’s complete spread of different lenders involved, which suggests these frauds were quite sophisticated.
“Intermediary-based lenders were more susceptible because you had more people involved in the food chain.
“If you had a dodgy broker they would know how to get under the skin of a lender’s underwriting practices.”
He went on to explain that electronic identification wasn’t commonly used a decade ago, so copies of ID, bank statements, utility bills and driving licences were open to forgery.
Today electronic IDs are cross-referenced with the Inland Revenue to get a view of a customer’s history, but previously “you were looking at the whites of people’s eyes”, as Pitt described.
Not only did technological limitations make fraudulent activity more achievable, the general attitude of mortgage companies didn’t help.
Pitt added: “We were in a different time then.
“The market was booming so numerous lenders were chasing market share, loosening credit criteria and launching non-status mortgages.
“The opportunity was there – particularly in the early 2000s. I’m not really surprised.”
Halifax declined to comment.
Nationwide was approached for comment and didn’t respond.