Mortgage fraud is booming
It may have become more difficult for the person on the street to secure a mortgage in the UK, but the mortgage fraud industry is booming. Mortgage fraud accounted for 27% of all fraud in the finance and insurance sector. These frauds typically work through a large loan being taken out on an overvalued property, with a crooked buyer in collusion with a corrupt valuer and/or lawyer. When these frauds hit here, they hit large, since the same team will work on many properties in succession.
Simon P. Bevan, head of fraud at BDO LLP, commented: “Based on my experience of the two previous recessions, I expect that reported fraud will treble over the next two years. There has always been a lag effect, with reported fraud continuing to rise for at least a couple of years after businesses start to come out of the recession.
“A large part of this will be a tidal wave of fraudulent borrowing that has only just started to appear, particularly through use of over-valued properties as security for loans, while the property market was booming. Currently many of these frauds are yet to be recognised by the banks, which still have them classified as non-performing loans.
“It is only when specialist recovery departments start thorough investigations and eventually litigating against alleged dishonest borrowers and their complicit advisors that the true nature of these potentially horrendous fraud losses will come to light. It will take many years for the excesses of the past years to work through the system.”