Mortgage fraud up 5%

Michael Lloyd

September 24, 2019

prevent fraud

Mortgage fraud has an increase of 5% in the first six months of 2019 compared to the last six months of 2018, fraud prevention service Cifas has found.

Fraud by production of a false document rose by 14% and fraud by submitting altered documents increased by 32%.

Mike Haley, chief executive officer of Cifas, said: “It’s easy to assume that making exaggerations to improve the chances of your mortgage being approved is harmless, but the reality is that this is fraud and the consequences can be very serious.

“Mortgage providers carry out rigorous checks, and so exaggerating your income or withholding any change of circumstances could result in it being harder to obtain financial products in the future such as mortgages and loans.

“In more serious cases, this kind of fraud could result in a hefty fine or a prison sentence, or the possibility of losing your home.”

This ties in with Cifas’s ‘Faces of Fraud’ campaign which aims to highlight the fact that what some view as a victimless crime is both illegal and could have serious consequences for those involved.

Some applicants often provide false or altered bank statements as a way to validate their income for mortgage applications.

Almost half of those caught committing application fraud (45%) were aged between 31-40 years old, a 16% increase compared to the last six months of 2018.

This was closely followed by those aged between 41-50 years old who saw a 6% increase.

People in the 35-44 age category were more likely to think that exaggerating their income on their mortgage application was ‘reasonable’ than any other age group.

The West Midlands saw the highest increase in fraudulent mortgage applications at 43%, whereas cases in the North East rose by a third.

Martin Cheek, managing director at anti-money laundering firm SmartSearch, added: “Mortgage applications may not traditionally be the area you’d associate with fraud; this significant increase shows that it is a vulnerable sector of the market. And while lenders and brokers will never stop people trying to commit fraud, they can stop them succeeding by ensuring their KYC processes are fit for purpose.

“All mortgage fraud – whether that is to exaggerate income to get a better deal, or for more sinister reasons such as money laundering  – has been perpetrated on the back of forged documents, but there has never been a fraudulent case linked to electronic verification.

“That is because electronic identification offers the most efficient and reliable way to check if someone is who they say they are and their documents are real.

“Banks and other lenders should be looking to switch to electronic verification now, not only because it will help put a stop to mortgage fraud, but because in January the fifth anti-money laundering directive comes into force and stipulates that electronic verification should be used by regulated sectors wherever possible.”

Sign up to our daily email