Lenders are losing their grip on fraud, says police
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Some lenders have taken their eye off the ball when it comes to detecting mortgage fraud, a top detective has warned.
Chief inspector Paul Barnard at the City of London Police says it is currently investigating 15 serious mortgage fraud cases compared with just four last year.
One case involves a lender being relieved of £100m by fraudsters overvaluing buy-to-let properties.
Barnard says: “You could easily argue that some lenders have taken their eyes off the ball with regard to fraud. We should be learning lessons from what has gone before to ensure we stop it happening again.”
The City of London Police is working with the Council of Mortgage Lenders to help lenders spot fraud.
But Barnard says lenders have not yet got to grips with identifying properties that are overvalued.
He says: “The biggest indicator that a property has been overvalued is that its price is so inflated there’s no way it could be accurate. This needs to be checked at the front end and that means lenders having the right systems in place.
“It doesn’t matter what policy a lender has, it’s about how this works on the front line.”
Barnard says lenders need to balance their desire for completions with the need for security.
Money derived from fraudulent mortgage deals is being used for money-laundering, drug dealing and even to buy boxes at Premier League football clubs.
Barnard says crooks may look for relatives or friends involved in the mortgage market and use them to create openings.
He adds: “It’s frauds committed in bulk that we are most concerned about. For example, if a group has relatives or friends who are mortgage brokers they could use this as an avenue into fraud.”
Margaret Cole, director of enforcement at the Financial Services Authority, warned last week that the responsibility for managing financial crime risks lies with firms’ senior management.
Cole says: “Senior management should take responsibility for managing the risks of financial crime whether these arise from money-launderers, fraudsters or brokers.”
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Readers' comments (9)
DM | 23 Nov 2009 10:51 am
"The biggest indicator that a property has been overvalued is that its price is so inflated there’s no way it could be accurate"
Nice work, Chief Inspector
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Anonymous | 23 Nov 2009 11:37 am
Margaret Cole doesn't mention the biggest culprits of fraud, (the banks) If I could tell you the amount of clients I have turned away that have walked into a Halifax, Abbey, RBS branch and done the deal you would be shocked. Easier to blame the brokers than the banks I guess.
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Anon | 23 Nov 2009 12:00 pm
Its true , The banks are to blame for the fraud. Why not chase them down. A programme a couple of years ago showed in house self cert fraud by BM Sols advisers. Do you not think it goes on in High Street bank branches.
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Anonymous | 23 Nov 2009 1:23 pm
If the Police investigated such crimes and looked to prosecute in more instances, then there would be a greater deterrent. Mortgage fraud is a very low priority for Police forces
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Damien Smith | 23 Nov 2009 5:00 pm
Cheers for the Barnet tickets!
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Anonymous | 24 Nov 2009 9:54 am
Without absolving Lenders of blame for poor lending practices, the police have shown little appetite for investigating blatent fraud. They are woefully undermanned, the criminals know this and continue pretty much with no risk. A Lender
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Anonymous | 24 Nov 2009 10:10 am
Yet another example of shutting the stable door when the horse is 3 counties away I fancy. He should apply to the FSA for a job!
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Melanie Samuels | 24 Nov 2009 10:10 am
I disagree that banks are to blame, I know from experience in Fraud that some brokers in the past have done/said anything to get the deal done, that includes encouraging clients to lie to secure the loan. Also what about the valuers they are culpable too often just agreeing with what they are told, particularly in relation to new build properties
That said thankfully most of these cowboys have left the industry now its hard to get deals etc
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PAU | 24 Nov 2009 10:28 am
It amazes me when fraud is mentioned that all these holier than thou people pop up with comments. Get real, the police seem to think that if a property bought for 300k was later sold for 400k its fraud if it later is only worth 300k.
Actually, dur, its what happens in boom and bust, yes, really, property prices rise and fall. A load of people were acquitted this morning on a case and the jurors didn't take that long. Its not fraud JUST if a property was previously valued higher than what it is now. Yes fraud does exist, though in 15 years I have seen very little evidence of it and shoeed away the odd tiresome timewasting individual ...and yet perfectly innocent landlords, valuers, solicitors are having the finger pointed at the them because of this boom and bust and this seems to play in to the hand of the 'hang 'em flog 'em brigade' many of whom seem to respond in these columns. Whats the answer? Treat everyone as a criminal unless they can prove otherwise?, that what chief inspector no clue seems to be saying. and amazingly, people are agreeing .
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